Citi Adds Nvidia, Marvell Technology To Holiday Shopping List

Semiconductor stocks have been beaten down in the second half of 2018, but one Wall Street analyst said Thursday investors should add two popular semi stocks to their holiday shopping lists.

The Analyst

Citi analyst Atif Malik upgraded Marvell Technology Group Ltd. MRVL from Neutral to Buy and raised his price target for the stock from $17.30 to $19.

Malik also reiterated his Buy rating and $244 price target for NVIDIA Corporation NVDA.

The Thesis

Marvel’s year-to-date decline of more than 25 percent has created a favorable risk-return outlook for investors, Malik said. He said a combination of increasingly diversified sales and gross margin expansion driven by the networking business should support Marvel’s earnings multiple.

“MRVL stock is currently trading at 11x P/E or towards the 10x storage peer multiple and is not getting much credit for networking ~46% of sales where networking peers trade at 22x P/E,” he wrote in a note.

Malik is forecasting low teens revenue growth for Marvel’s networking segment through at least 2021.

Malik also said Nvidia’s shares have reset following the cryptocurrency mining bust. Near-term pricing pressures in the Pascal market will likely continue through the holiday season, and slowing demand in the data center market could weigh on growth over the next several quarters. However, Malik said Nvidia’s exposure to secular growth markets such as supercomputing, deep learnings, machine learning, data analytics and graphics is a winning recipe for long-term investors.

Price Action

Nvidia stock traded around $149.43 at time of publication, while Marvell traded up about 1.6 percent to $15.60 per share.

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