Susquehanna Cuts Price Target on Marvell Technology (MRVL) Ahead of its Earnings Report

Susquehanna maintained a Positive rating on Marvell (NASDAQ: MRVL), and cut the price target to $16.00 (from $18.00), ahead of its earnings report. Analyst Chris
Caso is reducing July-quarter storage estimates by $20 mln to $330 mln, reflecting a decline of 6% Q/Q, vs. prior expectations of down 2% Q/Q. MRVL is scheduled to release 2Q16 earnings on August 20th.

Caso commented, "We're reducing our estimates for the second time this quarter, to reflect continuing challenges in the HDD and mobile end markets. After now hearing from many MRVL peers and from their HDD customers, we don't expect such weakness to be a significant surprise to investors, and the stock has pulled back accordingly. But most sell-side estimates have not changed, so we do expect estimates to come down somewhat meaningfully on the upcoming earnings report. Unfortunately, the main element in our positive thesis - a spinout of the handset business - has thus far failed to play out. And as we've been waiting for that event, MRVL's main end markets have continued to deteriorate. In addition, while the appeals court ruling in the ongoing CMU litigation appears to be on-balance favorable, it's not over - and can still take an unfavorable turn given the need for another partial trial. We're choosing not to change our opinion in light of the likelihood that HDD conditions likely improve from here, and we expect the calls to exit handsets to grow even louder. But we do expect estimates to get worse before they get better."

For an analyst ratings summary and ratings history on Marvell click here. For more ratings news on Marvell click here.

Shares of Marvell closed at $12.86 yesterday.

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