Analysts Tweak Estimates on Marvell Tech (MRVL) Following Weak Q1 Performance But Better-than-Expected Q2 Guidance

Marvell Technology Group (Nasdaq: MRVL) reported its Q1 earnings on Thursday, May 26, 2011, showing EPS coming in $0.01 below the Street expectations and revenue falling well below forecasts.

Shares began trading down after hours Thursday amid the miss, but rebounded quickly as the company offered strong guidance on its conference call.

Shares are currently up 10 percent, or $1.46, to $16.01.

The company reported its April quarter results with sales of $802 million and EPS of $0.24. Weakness in mobile and wireless drove most of the shortfall in the quarter. MRVL’s July quarter guidance calls for sales of $870 million to $$910 million and EPS of $0.37. The consensus is currently $879 million and $0.34.

• Citadel Securities - "we think the new TD design wins will only serve to offset further losses at RIM, given incremental pressure as international sales become a greater portion of the mix at RIM. Further while Marvell expects to have a position with RIM in new phones, we think its incumbency will likely be challenged by QCOM basebands (2H11), and by RIM's transition to a new OS (1H12). In storage, we think Marvell's confidence in its ability to maintain sole source status at multiple OEMs could prove misplaced, as consolidation among HDD vendors skews the risk for share loss to the downside."
  
  The firm is raising its FY12 and FY13 EPS estimates from $1.35 and $1.45 to $1.42 and $1.50.
  
  Maintains Neutral rating and $18 price target.
  
  
• DA Davidson - "Despite the potential loss of key platforms at RIM, and continued headwinds for the overall PC market, we are encouraged by MRVL’s strong 80% design win rate for TD based handsets, improved commentary around its SSD business, and ramps at new HDD customers."
  
  The firm is lowering its FY12 EPS estimate from $1.50 to $1.47 and is maintaining its FY13 at $1.60. It is also lowering its FY12 and FY12 revenue estimates from $3.69 billion and $3.98 billion to $3.6 billion and $3.88 billion.
  
  Maintains Buy rating and $23 price target.
  
  
• Deutsche Bank - "MRVL appears poised to benefit from investments in TD-SCDMA and SSD controllers as those markets see accelerating demand in F2Q12. Combined with share gains in Storage and our expectations for better PC seasonality suggest revenue growth will be sustainable through the rest of the year."
  
  The firms current FY12 and FY13 EPS estimates are $1.50 and $1.59.
  
  Reiterates Buy rating and $22 price target.
  
  
• Goldman Sachs - "We believe Marvell’s solid guidance could partly alleviate the market’s concerns about the company’s ability to grow outside its core storage and networking franchise. However, we have reservations about Marvell’s ability to broaden its wireless customer base, as that business remains subject to significant volatility based on limited customer exposure."
  
  The firm is raising its FY12 estimate from $1.30 to $1.40 due to a lower share count and is maintaining its FY13 and FY14 estimates at $1.40 and $1.50.
  
  Maintains Neutral rating and $18 price target.

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