FBR Capital maintain an Outperform on Marvell (MRVL); Raises PT & Estimates

October 26, 2009 1:08 PM EDT

FBR Capital maintain an Outperform rating on Marvell (Nasdaq: MRVL), raises price target to $22.

FBR analyst says, "This morning, Marvell raised its 3Q revenue guidance from $680-$730 million (+10% QOQ midpoint) to $760-$775 million (+20% QOQ midpoint). The firm cited a broad improvement in demand across multiple end markets. Remember, top customer Western Digital recently reported robust results, issued upside 4Q guidance, and discussed very lean supply/demand conditions within the hard disk drive industry (and record low inventories). Also noteworthy, Marvell did not encourage investors to remain cautious on 2H09 demand prospects as they did last quarter, a positive. We believe the main derivative from this positive preannouncement is peer LSI Corp. (NYSE: LSI) (Outperform), who reports 3Q results this Wednesday after the market closes. Stepping back, shares of MRVL continue to be one of our favorite ideas as the firm still stands to benefit from: (1) improving PC demand in 2010 on the corporate side; (2) share gain opportunities in 2010-2011 with Seagate and Hitachi (though some partially offsetting share losses to LSI are also possible); (3) ramping TD-SCDMA baseband shipments into China; and (4) combo chip growth. Shares are very attractively valued trading at a P/E of 12x and 16x (calendar 2010 pro forma and including stock compensation expense, respectively). Marvell has ramped its profitability very meaningfully in recent quarters, and we think the stock will see additional upside."

"We're raising our calendar 2009 EPS estimate from $0.68 to $0.76, our calendar 2010 EPS estimate from $0.98 to $1.10, and our price target from $20 to $22, solely due to our higher EPS estimates...Third-quarter revenue is now expected to be $760-$775 million (+19% to +21% QOQ), better than its old revenue guidance of $680-$730 million (+6% to +14% QOQ). The firm cited a broad improvement in demand across end markets."

To see more analyst ratings on MRVL Click Here.

Related Categories

Analyst Comments

Stocks Mentioned

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?