Tuesday, October 13, 2020

Marvell Management Uses Its Analyst Day To Talk Up The Growth Story

It’s not really fair to say that Marvell (MRVL) is “doubling down” on its growth opportunities in the data center and 5G, but management definitely structured their analyst day on October 8 to highlight Marvell’s transformation into a growth story. While this will come at a modest cost to margin (historically an underappreciated driver of semiconductor stock multiples), this is a growth-driven market today and the messages coming out of the analyst day shouldn’t do any harm to the already-robust multiples for these shares.

Strategically I like what Marvell is doing. I like the opportunities to leverage Cavium IP for data center DPUs and likewise the opportunities to leverage its Cavium and Avera IP into custom ASICs. Auto Ethernet opportunities are shaping up, and 5G should provide strong growth for several years. The issue is the price and the multiples. I was already expecting double-digit revenue growth over the next five years (and close to 9% growth over the next 10 years), and the presentation didn’t support a strong outlook for margins. At over 31x ’22 EPS and 26x ’23 EPS, it’s tough to say that the growth potential is going unappreciated.

Read the full article here: 

Marvell Management Uses Its Analyst Day To Talk Up The Growth Story

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