On Wednesday, Wolfe Research demonstrated its optimism for Marvell (NASDAQ:MRVL) by raising the price target on the company's shares to $130.00, up from the previous target of $90.00. The firm maintains an Outperform rating on the stock, signaling their positive outlook on Marvell's future performance. The new target represents significant upside potential for the $83 billion market cap company, which is currently trading near its 52-week high of $98.72.
The new price target is set at approximately 38 times the firm's estimated earnings per share (EPS) for calendar year 2026 (fiscal year 2027), which stands at $3.42. This valuation marks a significant increase over Marvell's average price-to-earnings (P/E) ratio of around 26 times over the past five years.
While the company is not currently profitable, InvestingPro analysis indicates that net income is expected to grow this year, with analysts forecasting positive earnings. The analyst justifies the higher multiple by highlighting Marvell's exposure to the AI data center sector and the overall trend of higher market multiples.
The rationale behind the Outperform rating and the elevated price target is Marvell's strong revenue growth, particularly from its structural growth businesses. These segments are reportedly expanding at an annual rate of around 40%. The analyst's positive stance on Marvell is influenced by the company's involvement in secular AI-related growth areas such as custom silicon and optical solutions.
Additionally, the expectation of a rebound in Marvell's cyclical businesses, which include enterprise networking, wireless, and storage, contributes to the confidence in the company's prospects. The report further strengthens this view, indicating a robust trajectory for Marvell.
Marvell's stock performance has been impressive over the past year, with an increase of 82%, which is in line with Broadcom's (NASDAQ:AVGO) 81% rise but falls short of NVIDIA's (NASDAQ:NVDA) 200% surge. In comparison, the S&P 500 and the SOX (PHLX Semiconductor Sector) have seen gains of 32% and 35%, respectively, during the same timeframe.
In other recent news, Marvell Technology Group Ltd (NASDAQ:MRVL). has been a focus for multiple analyst firms following robust financial results and optimistic future projections.
Stifel has maintained a Buy rating and raised the price target to $125, citing the company's strong October quarter results and growth in data center and artificial intelligence revenue. Rosenblatt and JPMorgan (NYSE:JPM) also increased their price targets to $140 and $130 respectively, citing strong demand in AI and data center markets. Raymond (NS:RYMD) James and Citi, too, have shown confidence in Marvell, raising their price targets to $120 and $112 respectively, due to strong Q3 results and a promising partnership with Amazon (NASDAQ:AMZN) Web Services.
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