Cowen and Company reaffirms Marvell Technology Group Ltd. (Nasdaq: MRVL) at Outperform with a price target of $12 following quarterly results from Seagate (Nasdaq: STX) and Western Digital (Nasdaq: WDC).

Analyst Tim Arcuri summarized: Following WDC/STX earnings, HDD units look to be ~470 million in '15 (down ~17% Y/Y); we forecast ~440 million for '16 (-6% Y/Y) which would require some improvement from the ~100 million guide in CQ1 from WDC - plausible as both see CQ1 as the bottom. We cut Marvell numbers to reflect this forecast, but target remains $12 on our breakup value analysis.

Estimate changes: FY16 moves from $0.46 to $0.42 and FY17 from $0.91 to $0.60. The firm sees FY18 EPS at $0.70.

On Marvell's valuation: Even if we assume MRVL pays several ~$100 million to CMU, this would value the entire company (excluding cash) at ~2x sales for its storage business, to say nothing of networking and connectivity (which could be marked to a much higher valuation if AVGO sells BRCM's connectivity assets at $6-8B or maybe more (we think INTC already bid $6B prior to the AVGO deal).

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