Marvell Stock: Market-Thumping 5G Stock Has 112% Upside

Marvell Technology Inc Bullish on Strategic Acquisitions

The stock market might not be firing on all cylinders, but 5G behemoth Marvell Technology Inc (NASDAQ:MRVL) is.

The company recently reported strong fourth-quarter financial results, with record revenue and a swing to profitability. Moreover, the company’s 5G and cloud technology portfolio has accelerated thanks to its acquisitions of Inphi Corporation and Innovium, Inc. in 2021.

In 2020, Marvell Technology Inc announced a partnership with Nokia Oyj (NYSE:NOK) to design and develop 5G radio access technology (RAT) silicone innovations. In 2021, Marvell announced that it was extending its long-term partnership with Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM).

Despite the raft of good news, MRVL stock hasn’t fared very well. It has been dragged lower by headwinds including soaring inflation, a hawkish Federal Reserve, fears of a recession, and bearish investor sentiment that’s at its highest level since 2009 (the Great Recession).

As of this writing, shares of Marvell Technology Inc are down by 33% year-to-date and up by 30% year-over-year.

That might not sound very encouraging, but Marvell stock is doing better than the S&P 500 (at least year-over-year). The S&P 500 is down by 14% from its January 3 peak and down by two percent year-over-year.

Meanwhile, the Dow Jones Industrial Average is down by 11% from its January 4 peak. Not to be outdone, the Nasdaq is down by 22.7% from its January 3 peak. And chances are good the stock market hasn’t bottomed yet. 

Despite the melee happening in the stock market, Wall Street analysts are bullish on Marvell Technology Inc. Of the analysts providing a 12-month price target for MRVL stock, their average estimate is $91.20 and their high estimate is $125.00. This points to potential gains from Marvell stock in the range of 55% to 112%.

Chart courtesy of Stockcharts.com

About MRVL Stock

Marvell moves, stores, processes, and secures the world’s data with semiconductor solutions—and it does it faster and more reliably than anyone else.

Thanks to the company’s deep knowledge, storied history, and leading intellectual property, its semiconductor solutions continue to transform the enterprise, cloud, automotive, industrial, and consumer markets. (Source: “Company,” Marvell Technology Inc, last accessed May 11, 2022.)

Marvell Technology Inc’s industry-leading position—along with a massive increase in demand for data, bandwidth, power efficiency, and end-to-end cybersecurity—is expected to drive the company’s long-term financial growth.

Acquisitions of Inphi Corporation & Innovium, Inc.

In April 2021, Marvell Technology Inc announced that it had completed its $10.0-billion acquisition of Inphi Corporation, further accelerating its growth in cloud and 5G infrastructure.

According to Marvell’s management, the acquisition “creates a U.S. semiconductor powerhouse positioned for end-to-end technology leadership in data infrastructure.” (Source: “Marvell Completes Acquisition of Inphi,” Marvell Technology Inc, April 20, 2021.)

With its acquisition of Inphi, Marvell has gained a strong position in optical networking chips that are used to help data move faster in cloud data centers and carrier networks.

In October 2021, Marvell completed its acquisition of Innovium, Inc., a leading provider of networking solutions for cloud and edge data centers. Marvell expects the acquisition to bring in approximately $150.0 million of incremental revenue in the current fiscal year. (Source: “Marvell Completes Acquisition of Innovium,” Marvell Technology Inc, October 5, 2021.)

Q4 Revenue Grows to Record Level

In March, Marvell announced its financial results for the fourth quarter of its fiscal 2022 (ended January 29, 2022).

The company’s fourth-quarter revenue exceeded the midpoint of its guidance, climbing by 68% year-over-year to a record $1.3 billion. (Source: “Marvell Technology, Inc. Reports Fourth Quarter and Fiscal Year 2022 Financial Results,” Marvell Technology Inc, March 3, 2022.)

Marvell reported fourth-quarter 2022 net income of $6.2 million, or $0.01 per share, up from a fourth-quarter 2021 loss of $62.5 million, or $0.08 per share. Marvell Technology Inc’s adjusted earnings were $429.0 million, or $0.50 per share, up by 17.8% from the $364.0 million, or $0.43 per share, in the same prior-year period.

The company’s cash flow from operations in the fourth quarter of fiscal 2022 was $346.0 million.

Marvell Technology Inc’s full-year revenue advanced 50% to $4.5 billion. Its net loss for fiscal 2022 was $421.0 million, or $0.53 per share. Its full-year adjusted net income went up by 103% to $1.3 billion, or $1.57 per share.

Analyst Take

With the demand for 5G and cloud technology growing, Marvell stock continues to be a great 5G stock that investors should have on their radar.

Marvell Technology Inc delivered record fourth-quarter revenue, with growth coming from all five of its end markets—the highest growth coming from 5G and cloud. The company also provided solid guidance for the first quarter of fiscal 2023.