AmTech Previews Marvell's (MRVL) Q2 Earnings; Maintains Buy

American Technology Research is out with a research note this morning previewing Marvell Technology's (Nasdaq: MRVL) Q2 earnings, which are expected out next Thursday, August 28, after the market close. AmTech maintains a Buy rating and $20 price target on shares of Marvell.

The firm expects Marvell to report a "solid" July quarter, with sales at the high-end of its revs guidance of $830-$840 million and EPS in-line to slightly better than the Street consensus of $0.21. Looking at specific business segments, AmTech is seeing strength in Marvell's HDDs, which makes up 49% of sales, XScale, accounting for 19% of sales and Wi-Fi, which makes up 6% of total sales.

In addition to sales and earnings, AmTech believes investors will be focused on whether Marvell could improve margins over the quarter. The firm is estimating gross margins of 51.5%, which is down from 52% last quarter, but up from 48-49% over recent quarters.

Turning to guidance, AmTech said it is anticipating sales guidance in the range of $880-$900 million, which is in-line with the Street's $887.61 million.

Notably, AmTech mentions that while shares of Marvell have outperformed the Nasdaq by 17% since its Q1 report, short interest has drastically increased by 28%, setting a certainly bearish tone for the quarter.

With shares of Marvell trading around $15.70 today, AmTech's price target represents a potential gain of more than 27% from current levels.

Marvell Technology Group, Ltd., a fabless semiconductor company, engages in designing, developing, and marketing analog, mixed-signal, and digital signal processing, and embedded microprocessor integrated circuits.

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