Marvell (MRVL) PT Lowered to $115 at UBS to Account for Celestial AI Deal

UBS analyst Timothy Arcuri lowered the price target on Marvell (NASDAQ: MRVL) to $115.00 (from $120.00) while maintaining a Buy rating.

The analyst commented, "With the Celestial AI transaction closing this morning, we are updating our model to account for the dilutive near-term impact from the deal. Celestial only starts to add revenue (initially we think nearly all Amazon) in FQ3:28 with revenue not large enough to offset opex dilution until FQ4:28. Ergo, we model EPS dilution of ~$0.20 in F2027 (C2026) and ~$0.16 in F2028 (C2027) versus our prior estimates. Beyond the impact of Celestial, we are making some slight adjustments to our modeling for the optics/switching and MSFT custom ASIC businesses that when netted together, have minimal impact to EPS beyond the Celestial dilution. We now assume ~300k Maia 300 units in C2027 and reduce our MSFT program contribution to ~$1.0B (from ~$1.4B previously), while leaving our C2028 estimate unchanged at ~$1.7B as we think the longer-term opportunity remains intact but timing seems a bit delayed versus our prior model. At the same time, we have become incrementally more bullish on MRVL’s AI networking and switching portfolio with 115T and 57T UALink switches scheduled for C2H:2026 and ramping into C2027 in addition to Celestial AI's $150-200MM revs in C2027 - when added together support modestly higher revenue expectations for C2027. Net, we are holding C2026 revenue flat at $9.7B but raising C2027 to $12.7B (from $12.3B), while lowering EPS to $3.26/$4.69 from $3.45/$4.76 to reflect Celestial-related dilution. Putting it all together, our new $115 PT is based on C2027 EPS at a 25x multiple (unchanged, and still below the peer average of ~29x), which we think suggests a potential upside bias to MRVL's multiple if it can successfully execute MSFT Maia 300 ramp at the end of C2027."

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