UPDATE: Marvell's (MRVL) Risk/Reward 'Skewing More Positive'; Morgan Stanley Upgrades to Overweight
Morgan Stanley upgraded Marvell (NASDAQ: MRVL) from Equalweight to Overweight with a price target of $17.50 (from $15.00). Analyst Joseph Moore said risk/reward is becoming more positive given management's enthusiasm for its new wireless technology, Final Level Cache.
Moore explained, "Management enthusiasm for a new wireless technology signals that there is no imminent baseband exit. But if the new technology matters, the payoff will be significant, and if it doesn’t, investment comes down."
"FLC hardware uses better predictive algorithms to store the most frequently accessed memory in the fastest access memory. So for hard disk drives, the technology could be used to store frequently accessed data in a small “cache” of NAND flash instead of the slower but cheaper hard disk. For phones, this could minimize the amount of expensive DRAM, by storing a higher portion of the data on the slower but cheaper NAND," continued the analsyt.
Moore added, "The company's core claim that FLC technology could reduce a high end android smartphone from 3 GB DRAM content to 0.5 GB while offering higher performance would certainly seem compelling, if true, as it would drive $15+ in bill of materials cost savings per phone, all else being equal. We need to be skeptical until we hear it from customers, which we haven't. But we do note that Marvell has driven substantial leaps in technology in similar areas before, notably hard drive read channel. $15 in cost savings per phone is substantial enough to give Marvell a strong foothold, should their claims prove accurate."
For an analyst ratings summary and ratings history on Marvell click here. For more ratings news on Marvell click here.
Shares of Marvell closed at $13.14 yesterday.