Marvell Technology Inc. (NASDAQ: MRVL) announced its earnings on Thursday, March 3, 2022, in which the company topped its Q4 2021 earnings and gave higher guidance for the current quarter attributed to sales gains in the third quarter.
What to look for: The company reported revenue growth in all five of its end market segments with robust contributions from 5G, auto and cloud, which represented 40% of the company's total revenue. The company produces data storage and networking chips vital in automotive communications, cloud computing, and other applications. The enterprise networking end market is becoming a growth pillar for the company and saw revenue increase 64% YoY attributed to share increases and content gains.
Earnings: Stockearning’s Estimated EPS was pegged at $0.48, but the company produced earnings of $0.50 per share. YoY the company's earnings grew 72%. For the current quarter, the company is guiding for adjusted earnings per share of $0.51, well above analysts' forecast of $0.49 per share. If the company achieves its current-quarter guidance, that will represent annualized growth of 76%.
Revenue: Sales in Q4 2021 grew 68% to $1.34 billion, topping estimates of $1.32 billion. For the current quarter, the company anticipated revenue of $1.425 billion at the midpoint of its outlook range. Analysts had predicted Q1 2022 revenue of $1.38 billion. If the company achieves the milestone, it will have grown its sales by 71% YoY.
Stock movement: MRVL shares have lost 6.3% since the company released its last earnings release. Interestingly, following the earnings release, the company’s shares have been DOWN 24 times in the past 44 quarters. So, the historical price reaction suggests a 55% probability of the share price going DOWN following the earnings release. According to the Stockearning algorithm, the predicted volatility on the first day is +/-5%, while the predicted volatility on the seventh day is +/-5%.
What analysts are saying: Needham analyst N. Quinn Bolton slashed the stock's price target on stock from $115 to $105 to reflect multiple compression across the but keeps a Buy on the shares following the Q4 earnings beat. Bolton is positive on the stock considering its supply is considerably improved and also cited new AEC opportunities and design wins that are boosting multi-year growth.
B. Riley analyst Craig Ellis slashed the firm’s price target on the stock from $115 to $95 but kept a Buy rating on the shares. Ellis told investors in a research note that the company topped Q4 estimates on solid product cycles and operational execution that effectively navigated persistent supply chain issues. The analyst lowered his price target to reflect multiple peer contractions.
Wells Fargo analyst Gary Mobley slashed his price target on the stock from $80 to $70 after the respectable Q4 beat and raise. Given the positive results and the recent pullback in the stock markets and chip industry, Mobley says it's enticing to become bullish on MRVL, but he's keeping his Buy rating. he added that notwithstanding the capacity additions, he thinks Marvell can end FY23 with a higher backlog than at the start of the fiscal year.
Deutsche Bank analyst Ross Seymore slashed his price target on the stock from $100 to $90 and maintained a Buy rating on the shares after solid Q4 results. He told investors that although the headline numbers were less flashy compared to the previous quarter, the company again showed the ability to deliver fast in line with well-diversified top-line.
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