Credit Suisse Upgrades Marvell (MRVL) to Outperform
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Credit Suisse upgraded Marvell (NASDAQ: MRVL) from Neutral to Outperform with a price target of $17.50 (from $13.50).
Analsyt John Pitzer commented, "We are raising our rating on MRVL to Outperform from Neutral, and despite the 65% move in the stock off the bottom, we still see the shares as attractively valued especially relative to our fundamental view that the new management team is still early in an operational turnaround which should support OpM expansion from ~13% in F2Q to ~25% exiting FY18, driving earnings potential from $0.10 in F2Q to annualized ~$1.15 exiting FY18 (not currently in our model)."
The firm sees the following positive catalysts:
(1) New management at MRVL can reduce operating expense by ~15-20% and still have the resources to invest in new growth initiatives – we would expect management to articulate their new strategy either late C4Q or early C1Q.
(2) While early, we see upside to F3Q guidance on both topline and GM – especially given that management guided GM to decline ~160 bps q/q despite a positive mix shift to their higher GM margin business, Storage.
(3) We expect the Company to resume share buybacks – following 3 quarters of no buybacks, with ~$3.00 in net cash per share we expect MRVL to start returning cash to shareholders
Shares of Marvell closed at $12.83 yesterday.
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