Friday is turning out to be a down day for the markets although that is probably scant consolidation for Marvell (NASDAQ:MRVL) investors. The shares are being subjected to a severe beating after the semi firm’s fiscal second quarter results failed to impress.
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At the bottom-line, the company met expectations, delivering adj. EPS of $0.67, in line with the Street’s forecast. Revenue climbed by 57.5% vs. the year ago period to reach $2 billion, although the figure came in $10 million short of the analysts’ call. Management noted during the call that data center growth (up by 69% year-over-year) is being mainly driven by custom XPU performance, XPU attach products, and optical interconnects.
That said, the outlook was mixed. Revenue is anticipated to hit $2.060 billion, plus or minus 5%, slightly below the consensus estimate of $2.10 billion. On the other hand, adj. EPS is expected at $0.74, plus or minus $0.05, compared with the Street’s $0.72 forecast. Data center revenues are anticipated to be flat sequentially, while the combined networking and carrier business is expected to rise about 30% quarter-over-quarter. Management noted that data center results will be weighed down by lower YoY custom sales, partially offset by strength in the optical portfolio, which the company expects will deliver double-digit revenue growth, fueled by strong demand for AI interconnects.
Piper Sandler’s Harsh Kumar, an analyst who ranks amongst the top 1% of Street stock experts, thinks the main factor behind the guidance top-line miss was the exclusion of the auto business following its recent sale. “That said,” the 5-star analyst went on to add, “the bigger issue at play with MRVL is the lack of sync between the growth commentary for data center and the implied guidance for FY27… We understand the dynamic given the sale of the auto business but our frustration lies in lack of growth at the data center.”
Kumar has now made some changes to his MRVL model. For F2026, he projects adj. EPS of $2.81 and $8.11 billion in revenue, compared with his previous estimate of $2.78 and $8.21 billion, respectively. Looking ahead to F2027, Kumar now forecasts adj. EPS of $3.42 and revenue of $9.34 billion, down from the prior call of $3.64 and $9.94 billion.
That’s where the revisions end, however, with Kumar remaining in the MRVL bull camp for now. He reiterated an Overweight (i.e., Buy) rating on the shares along with a price target of $85. There’s potential upside of 32% from current levels. (To watch Kumar ‘s track record, click here)
The Street’s average target is even a little higher; at $89.2, the figure makes room for 12-month returns of 38%. All told, based on a mix of 25 Buys and 7 Holds, the stock claims a Strong Buy consensus rating. (See Marvell stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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