FBR Capital upgraded Marvell (NASDAQ: MRVL) from Market Perform to Outperform with a price target of $21.00 (from $19.00) citing a compelling valuation, setup, and risk/reward ratio following the after-hours sell-off post Q4 results.

Analyst Christopher Rolland commented, "We now estimate a $0.45 (and perhaps $0.50) EPS drag from cellular in 2015, with the optionality of a divestiture or restructuring greatly underappreciated by investors. While CY 4Q14 results and 1Q15 guidance were significantly worse than expected, the vast majority of our 2015 EPS cut is attributable to a weaker wireless outlook, with the core earnings power of the Marvell franchise (almost) unchanged. Furthermore, we believe the poor wireless results bring management one step closer to ultimately determining the fate of the company’s mobile business (we view management’s tone as slightly more open on the issue). Today, we examine three destinies for the company’s mobile division and its impact on shares: (1) status quo (our least favorable option and current model), as the division attempts to gain the needed scale to attain profitability; (2) restructuring or shuttering mobile (a positive option as MRVL may trade into the high teens or low 20s); or (3) selling its mobile business outright (our favorite option, MRVL could trade into the low to mid 20s). In short, today’s upgrade is a long-term call on EPS accretion, catalyzed by the sale, restructuring, or success of the company’s wireless division. Also, at just 12x our adjusted 2016 EPS (EV/pro forma net income incl. SBC), we do not believe investors are currently attributing any value to more constructive scenarios for mobile. Given the sell-off in shares after hours, we are opportunistically raising our rating on MRVL to Outperform and increasing our price target from $19 to $21."

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Shares of Marvell closed at $16.40 yesterday.