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Earnings Previews: Dell, Gap, HP, Marvell

HP

Another tech hardware maker, HP Inc. (NYSE: HPQ), also has posted a share price increase of more than 60% in the past 12 months. And like Dell, at one point in May the stock was trading higher by 95% than it was in August of 2020. PC shipments from all makers are expected to rise by 14.2% this year, a reduction of 22% from an earlier estimate due to supply and logistics issues. That means chips and, primarily, air cargo availability. Dell faces the same issues, of course.

Analysts are more cautious on HP stock than they are on Dell. Of 19 brokerages, eight rate the shares a Buy or Strong Buy, seven give the stock a Hold rating and the other four rate the shares a Strong Sell. At the price of around $29.50, the stock’s upside potential based on a median price target of $32 is 8.5%. At the high price target of $40, the upside potential is about 35.6%.

For the company’s third quarter of fiscal 2021, analysts are looking for revenue of $15.92 billion, up less than 1% sequentially and by more than 11% year over year. Adjusted EPS are expected to total $0.84, down 10% sequentially and up 71% year over year. For the 2021 fiscal year, current estimates call for EPS of $3.50 (up 53.4%) and sales of $63.4 billion (up nearly 12%).

The stock trades at 8.2 times expected 2021 EPS, 8.0 times estimated 2022 earnings and 7.9 times estimated 2023 earnings. The stock’s 52-week range is $17.25 to $36.00, and HP pays an annual dividend of $0.78 (yield of 2.75%). HP also has committed to quarterly stock buyback of at least $1 billion.

Marvell

Chipmaker Marvell Technology Inc. (NASDAQ: MRVL) has added more than 82% to its share price over the past 12 months, including a year-to-date gain of nearly 33%. The company’s $51.7 billion market cap is about a tenth that of Nvidia and less than a quarter that of Intel. Credit Suisse analyst John Pitzer called the company “one of the best idiosyncratic growth stories” in a research note Wednesday reiterating his Outperform rating on the stock and his $70 price target.

Pitzer is not alone. Of 30 analysts covering the stock, 24 rate the shares a Buy or Strong Buy, with five more rating the stock a Hold. At a price of $63.05, the stock’s upside potential at a median price target of $66 is 4.7%. At the high target of $74, the upside potential is 17.4%.

For Marvell’s second quarter, analysts are expecting revenue of $1.07 billion, up 28% sequentially and 47% year over year. Adjusted EPS are tabbed at $0.31, up 7.9% sequentially and nearly 50% year over year. The current estimates for the 2022 fiscal year call for EPS of $1.40, up nearly 52%, on sales of $4.22 billion, or 42% higher.

The stock trades at 44.4 times expected 2022 EPS, 33.6 times estimated 2023 earnings and 26.1 times estimated 2024 earnings. The stock’s 52-week range is $35.13 to $63.34. The high was posted in the morning. Marvell pays an annual dividend of $0.24 (yield of 0.39%).

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