On Wednesday, Marvell Technology Group Ltd . (NASDAQ:MRVL) saw its price target increased by a market analyst from Rosenblatt, citing a significant beat in the October quarter earnings and a strong demand in data center and artificial intelligence (DC/AI). The new price target is set at $140, up from the previous $120, while the Buy rating on the stock remains unchanged.
The stock, currently trading at $95.91, has demonstrated remarkable momentum with an 85% return over the past year. According to InvestingPro data, analyst consensus remains strongly bullish with targets ranging from $74.20 to $135.
Marvell's recent financial performance outpaced expectations, driven by increased demand for custom ASIC, networking, and electro-optics products. The company's management has expressed confidence in surpassing the previously set AI sales targets of over $1.5 billion for fiscal year 2025 and $2.5 billion for fiscal year 2026. Furthermore, Marvell has reaffirmed its goal to achieve $8 billion in AI sales in the coming years with greater certainty. InvestingPro analysis reveals that while the company operates with moderate debt levels, it maintains strong liquidity with a current ratio of 1.79, positioning it well for future growth investments.
The optimism is supported by the rapid development and deployment of new and existing AI/ASICs technologies, which are transitioning to more advanced 3/2nm processes. Marvell is also expanding its multi-generational broad-based engagements, exemplified by a recent update with Amazon (NASDAQ:AMZN) Web Services (AWS). The company has increased its focus on research and development in the DC/AI sector, which has led to a restructuring charge reflected in the profit and loss statement, though it was primarily non-cash.
Marvell's non-AI segments are also showing signs of recovery, which is expected to balance the impact of the custom ASIC mix on gross margins (GMs) next year. The anticipated GMs are around 60%, with operating margins (OpMs) projected to be similar to non-AI areas. In light of these developments, Rosenblatt has revised its estimates for Marvell's fiscal year 2027 revenue and Non-GAAP EPS upward, from $8.70 billion and $3.50 to $9.93 billion and $4.00, respectively.
The increased price target of $140 reflects a mid-30s price-to-earnings (P/E) multiple applied to the updated fiscal year 2027 Non-GAAP EPS estimate. This adjustment underscores the analyst's confidence in Marvell's growth trajectory, particularly in the AI sector, and the company's strategic focus on innovation and market expansion. With a market capitalization of $83.08 billion and trading near its 52-week high, InvestingPro analysis indicates the stock is currently fairly valued. Investors seeking deeper insights can access comprehensive valuation metrics and 14 additional ProTips through InvestingPro's detailed research reports.
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