Marvell Technology Is Heavily Insulated From Consumer Weakness, Can Outperform Peers In Broader Chip Sector

  • Wells Fargo analyst Gary Mobley reiterated Marvell Technology, Inc MRVL with an Overweight with a $58 price target
  • While MRVL will not be able to avoid global macro pressures altogether, he believes the company is heavily insulated from the consumer weakness most pronounced in the current macro softness. 
  • When the global economy does find more sure footing, he believes MRVL's fundamentals and share price can outperform peers' in the broader chip sector. 
  • Mobley expects MRVL to post above-consensus October quarter results and January quarter guidance.
  • The price target is near the lower end of MRVL's prior two-year valuation parameters. Still, it represents a premium to SOX index current multiples, perhaps justified by MRVL's above-average EPS growth. 
  • More specifically, he believes the SOX index should trade at 20.0x a normalized EPS level (versus trading well below 20.0x NTM EPS as investors discounted EPS cuts). 
  • His assumption that MRVL trades at a premium to the SOX is consistent with his messaging. 
  • Price Action: MRVL shares traded higher by 1.43% at $42.15 on the last check Tuesday.
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