Marvell Technology Group Ltd. (NASDAQ: MRVL) is scheduled to report its fiscal third-quarter financial results after the markets close on Thursday. The consensus estimates are calling for $0.12 in earnings per share (EPS) and $615.89 million in revenue. The same period of last year reportedly had $0.05 in EPS and revenue of $674.06 million.
Credit Suisse recently issued an upgrade based on a view that Marvell’s shares are attractively valued relative to the fundamental view that the new management team is still early in an operational turnaround. The analyst on this call noted that the operating margin could expand to 25% in 2018 from roughly 13% seen back in the second quarter. If that comes about, then the analyst sees Marvell’s second-quarter earnings potential of $0.10 per share rising to an annualized $1.15 per share exiting fiscal year 2018.
Upside to Credit Suisse’s price target will become more dependent on whether Marvell 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, Credit Suisse believes that the risk/reward is favorable.
Ahead of the earnings report, a few analysts weighed in on Marvell:
- B. Riley reiterated an $18 price target.
- Benchmark has a Hold rating with a $12 price target.
- Brean reiterated a $16 price target.
- Needham reiterated a Hold rating.
- Credit Suisse has an Outperform rating with a $17.50 price target.
- Susquehanna has a Neutral rating with a $13 price target.
- Oppenheimer has a Market Perform rating.
- MKM Partners has a Neutral rating.
- Morgan Stanley has an Equal Weight rating with a $14 price target.
So far in 2016, Marvell has outperformed the broad markets, with the stock up nearly 53%.
Shares of Marvell were last seen at $13.48 on Thursday, with a consensus analyst price target of $13.75 and a 52-week trading range of $7.40 to $13.61.