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On Friday, CFRA increased its stock price target for Marvell (NASDAQ:) Technology Group Ltd. (NASDAQ:MRVL), a semiconductor company, from $70 to $84, while reiterating a Strong Buy rating. The firm’s analysts cited a positive outlook based on an adjusted price-to-earnings (P/E) ratio and anticipated earnings per share (EPS) growth.
The new 12-month price target is based on a P/E ratio of 30 times CFRA’s calendar year 2025 EPS forecast, which is higher than the average for Marvell’s peers but still below the company’s historical average. CFRA maintained its EPS estimates for fiscal years 2024, 2025, and 2026 at $1.51, $2.31, and $2.79, respectively.
As investors await Marvell’s January-quarter results, which are due to be released after the market closes on March 7, CFRA expects the company to report revenue of $1.42 billion and EPS of $0.46, consistent with the previous year’s figures.
The focus is likely to be on the company’s artificial intelligence (AI) revenue, which has been a key growth driver for its data center segment, accounting for half of Marvell’s total sales.
The analyst noted that AI revenue is on track to exceed the forecasted fiscal year 2025 run rate of $800 million. This growth is attributed to increased momentum from both the optics and custom silicon solutions, which each contribute about half of the total AI revenue.
Despite facing challenges in the past year with declines in enterprise networking, carrier, and storage segments, Marvell’s customer inventories in these areas are now appearing more normalized. This normalization is expected to support a cyclical recovery by mid-year.
The combination of a rebound in cyclical businesses and the continued strong performance in AI could potentially lead to notable gains for Marvell.
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This story originally appeared on Investing
