Semiconductor maker Marvell shares are active today, likely on the fact that yesterday’s earnings were not only indicative of a bottom in the cycle, and not any worse than expected, but actually positive.
Marvell Technology (MRVL) was up about $1, or 7%, to $14.72. Here are some analyst insights on the earnings call and outlook:
FBR analysts Craig Berger and Christopher Rolland:
“Marvell reported about in-line calendar 3Q11 financial results and guided calendar 4Q11 better than feared given the Thailand flood tragedy, with indications that overall earnings are fairly resilient even in the face of macroeconomic pressures, supply chain inventory de-stocking, and inflationary cost pressures, a positive. Marvell guided 4Q11 revenues to $775 – $825 million (-13% to -19% quarter over quarter), worse than the Street’s $824 million, but better than feared. Marvell estimates a $125 million Thailand flood impact in 4Q11, shrinking by roughly half in 1Q12, narrowing toward even in 2Q12, and then ramping above true demand levels in 2H12 as supply chain replenishment occurs, likely driving sequential storage shipment growth in each quarter of 2012 for Marvell (turning lemons into lemonade!!)”
Citi analysts Glen Yeung, C. Adeline Lee and Delos Elder:
“While there is a healthy wall of worry for MRVL shares, we come away from their results encouraged. We view 4Q12 as the worst quarter for storage revenues, assuming a recovery through 2Q13. We model substantial growth in TD revenue, even as we expect market share cessation and we suspect investors are not giving Marvell credit for cost reduction here. We view Marvell�s ample cash as helpful to investors in the current from (buybacks) and potentially a dividend in future. Based on our revised model, within our coverage, MRVL demonstrates top tier revenue growth and FCF margin. Meanwhile the shares are trading at a 22% and 26% discount to the sector on a PE & PB basis respectively. We reiterate our Buy rating as a result. The worst HDD [hard disc drive] quarter is now.”
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