Marvell Technology Inc: 5G Stock Up 74% YOY on Record Results

Marvell Stock Bullish on Blockbuster Acquisitions

Marvell Technology Inc (NASDAQ:MRVL) is an excellent 5G stock I’ve been keeping my eye on for years. The last time I looked at this data infrastructure semiconductor provider was in January. Back then, MRVL stock was trading at record levels of about $53.00.

Then, on October 26, Marvell stock hit a new all-time high of $69.09, for a short-term gain of 30%.

MRVL stock has been rewarding investors for the past year. As of this writing, shares of Marvell Technology Inc are up by 45% year-to-date and 74% year-over-year.

Strong gains indeed, and the outlook for Marvell stock remains bullish.

Of the Wall Street analysts providing a 12-month share-price forecast for MRVL stock, their average target is $76.20, with a high estimate of $100.00. This points to potential gains of 12% and 46%, respectively.

Why the upbeat nod from Wall Street?

In addition to 5G industry tailwinds, Marvell Technology Inc delivered record second-quarter revenue.

Moreover, the company expects that its year-over-year revenue will accelerate in the third quarter, fueled by the cloud data center market. Marvell also expects its 5G business to continue reporting strong sequential revenue growth and significant revenue growth in the fourth quarter.

One thing that positions Marvell Technology Inc for serious growth is its recent acquisitions.

In April, the company closed on its $10.0-billion acquisition of Inphi Corporation, accelerating its growth in the cloud data center and 5G end markets. 

In early October, Marvell announced that it had completed its $1.1-billion acquisition of Innovium Inc., a leading provider of networking solutions for cloud and edge data centers.

The acquisitions plus Marvell Technology Inc’s organic growth should help the company continue providing Marvell stock investors with dividends. In September, the company’s board of directors declared a quarterly dividend of $0.06 per share, for a yield of 0.35%.

Chart courtesy of StockCharts.com

MRVL Stock Overview

Marvell is a data infrastructure semiconductor solutions provider that moves, stores, processes, and secures the world’s data.

Its five end markets include data center, carrier infrastructure, enterprise networking, consumer, and automotive/industrial. (Source: “Investor Day 2021,” Marvell Technology Inc, October 6, 2021.)

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.

That became increasingly important during the COVID-19 pandemic, which has seen the demand for data and bandwidth, power efficiency, and end-to-end cybersecurity soar.

Industry demand for 5G solutions has put pressure on companies like Marvell Technology Inc to create powerful semiconductors that can reliably power the data centers and networks around the world.

Record Q2 Revenue

For the second quarter of fiscal 2022 ended July 31, Marvell announced that its revenue advanced 58% year-over-year and 29% sequentially to a record $1.1 billion. (Source: “Marvell Technology, Inc. Reports Second Quarter of Fiscal Year 2022 Financial Results,” Marvell Technology Inc, August 26, 2021.)

That revenue growth was fueled by the data center segment, which currently represents Marvell’s largest end market, at 40% of its total revenue. The data center sector also just happens to be the fastest-growing cloud infrastructure market.

Marvell Technology Inc reported a second-quarter 2022 net loss of $276.0 million ($0.34 per share), versus a second-quarter 2021 net loss of $157.8 million ($0.24 per share) and a first-quarter 2022 net loss of $88.2 million ($0.13 per share).

Marvell ended the 2022 fiscal second quarter with $560.0 million in cash and cash equivalents.

For the fiscal third quarter, Marvell Technology Inc expects to report:

• Net revenue of approximately $1.1 billion, compared to $750.0 million in Q3 2021
• Net earnings per share in the range of negative $0.10 to positive $0.04, versus negative $0.03 in the same period last year
• Adjusted net income of about $0.38 per share, compared to $0.25 per share in Q3 2021

Analyst Take

Over the last five years, Marvell Technology Inc has pivoted away from consumer applications and is now a leader in the rapidly growing cloud data infrastructure and 5G markets.

Furthermore, the acquisitions of Inphi Corporation and Innovium, Inc. should give Marvell a technological advantage in the high-performing networking market.

All that could benefit Marvell stockholders.