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Marvell Technology Group Ltd. (NASDAQ: MRVL) may have recovered handily, along with many semiconductor players of late. Despite an auditor withdrawal last year and despite senior management stepping down more recently, one analyst is saying that Marvell has almost 40% left in additional upside from prior prices.

Credit Suisse’s John Pitzer has just raised his rating to Outperform from Neutral. The price target was also raised to $17.50. His prior price target was just $13.50.

Some issues need to be considered here. One is that this call is after a 65% move in the stock off the bottom. Another issue is that Credit Suisse was more or less in line with the street consensus price target of $13.47 before this upgrade. Another consideration is that this price target of $17.50 now makes Pitzer the most bullish and most aggressive of all analysts on Wall Street.

Wednesday’s upgrade is based on a view that Marvell’s shares are attractively valued relative to Pitzer’s fundamental view that the new management team is still early in an operational turnaround. He thinks that operating margin could expand to 25% in 2018 from roughly 13% seen back in the second quarter. If that comes about, then Pitzer sees Marvell’s second-quarter earnings potential of $0.10 per share rising to an annualized $1.15 per share exiting fiscal year 2018.

Pitzer’s report said:

Upside to our new PT will become more dependent on whether MRVL can find new avenues of growth especially in networking, to offset what is likely to be a more stagnant longer term growth in Storage owing to SSD displacement of HDDs. However, with almost 40% upside in the stock based largely on self-help and operational execution we believe the risk/reward is favorable …

Several positive catalysts were cited:

• New management can reduce operating expense by 15% to 20% and still have the resources to invest in new growth initiatives.
• Upside to third-quarter guidance on both revenue and on gross margin.
• An expected resumption in share buybacks, after three quarters without buybacks.
• The company has roughly $3.00 in net cash per share.

Marvell shares were trading up only one cent a $12.84 on Wednesday in the noon hour. Its 52-week trading range is $7.40 to $13.56, and the market capitalization is $6.57 billion.