Marvell Technology Group Ltd.: 5G Stock on a Tear; up 133% Since March

Marvell Technology Group Ltd. Unfazed by Market Sell-Off

Marvell Technology Group Ltd. (NASDAQ:MRVL) is a leading, global semiconductor company operating in a number of high-growth areas, including 5G, cloud, artificial intelligence, Internet of Things (IoT), and the automotive space.  All areas that are experiencing explosive growth.

But that’s not news to Marvell Technology shareholders. In fact, Marvell Technology stock has been on a strong growth trajectory for years. Since the start of 2016, MRVL stock has soared 366%.

Thanks to strong second-quarter results, which exceeded the midpoint of the company’s guidance, MRVL stock wasn’t really phased by the early September stock market sell-off. Marvell’s share price is up 11% year-over-year and 44.2% since the start of 2020, and it has advanced 133.5% since March.

Management provided solid guidance for the third quarter, which should help propel the company’s stock higher over the coming months.

Chart courtesy of StockCharts.com

MRVL Stock Overview

Marvell Technology Group Ltd. designs, develops, and supplies mixed-signal and digital signal processing, as well as integrated circuits that move, store, process, and secure the world’s data faster and, according to the company, more reliably than anyone else.  (Source: “Enhanced Wireless Microcontroller Enables Affordable Design,” Marvell Technology Group Ltd., November 5, 2018.)

And it is these market forces that will continue to drive Marvell’s growth. This includes the massive increase in demand for data and bandwidth and the need for power efficiency and end-to-end security.

Case in point, as automotive trends evolve, the number of connected devices is experiencing explosive growth. By 2025, it is estimated that there will be 41.6 billion connected IoT devices, generating an eyewatering 79.4 zettabytes of data. (Source: “Telemetry: Can You See the Edge?,” Marvell Technology Group Ltd., July 23, 2020.)

A big portion of this demand will come from traffic video flows and the sensor traffic that will be needed to process huge data flows across a hybrid cloud model.

The company’s “EZ Connect” platform is used by a large number of global customers in the wearables, automation, automotive, consumer, and industrial sectors.

Customers include Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOGL), Hewlett Packard Enterprise Co (NYSE:HPE), Facebook, Inc. (NASDAQ:FB), and Palo Alto Networks Inc (NYSE:PANW).

Strong Second-Quarter Results

On August 27, Marvell announced that revenue, for the second quarter of fiscal 2021, ended June 30, exceeded the midpoint of the company’s guidance, advancing 10.7% to $727.0 million. (Source: “Marvell Technology Group Ltd. Reports Second Quarter of Fiscal Year 2021 Financial Results,” Marvell Technology Group Ltd., August 27, 2020.)

The company reported a second-quarter net loss of $158.0 million, or a loss of $0.24 per share. During the second quarter of fiscal 2020, Marvell reported a net loss of $57.3 million, or a loss of $0.09 per share.

Marvell reported adjusted net income of $140.0 million, or $1.20 per share, a 17.7% increase over adjusted net income of $109.3 million, or $0.16 per share, in the same prior-year period.

Cash flow from operations was $226.0 million, which was a 209% increase over $73.1 million in the second quarter of fiscal 2020.

“Marvell delivered strong second-quarter financial results with revenue above the mid-point of guidance, growing 11% year on year and 5% sequentially. We are expecting revenue growth to continue in the third quarter, driven primarily from 5G wireless infrastructure and cloud datacenter end markets” said Matt Murphy, president and CEO.

“We also announced the extension of our long-term collaboration with TSMC to deliver a comprehensive silicon portfolio for the data infrastructure market leveraging the industry’s most advanced 5 nanometer process technology.” (Source: Ibid.)

Analyst Take

Marvell Technology Group Ltd.’s portfolio of data infrastructure semiconductor technology helps move, store, process, and secure the world’s data.

Thanks to the growing demand for 5G, cloud, and IoT, the need for Marvell’s technology continues to grow. The company, which reported strong second-quarter results, expects to drive earnings expansion in the third quarter.