Marvell Shares Soar on Earnings Beat but Analyst Warns Durability Concerns Seem Unlikely to Fade

© Reuters. Marvell (MRVL) Shares Soar on Earnings Beat but Analyst Warns Durability Concerns Seem Unlikely to Fade

By Senad Karaahmetovic

Shares of Marvell Technology (NASDAQ:MRVL) are up more than 5% in premarket trading Friday after it reported Q1 adjusted EPS and revenue that were above analyst estimates.

MRVL posted adjusted EPS of 52c in the first quarter, compared to 29c in the year-ago period, topping the estimates of 51c per share. Net revenue came in at $1.45 billion, up 74% YoY and above the analyst consensus of $1.43 billion.

The Data center revenue stood at $640.5 million, beating the expected $601 million. MRVL reported a Q1 gross margin of 65.5%, compared to 64.3% in the year-ago period and in line with the analyst expectations.

For Q2, Marvell expects adjusted EPS in the range of 53c to 59c, compared to the expected 55c. The company forecasts Q2 net revenue in the range of $1.47 billion to $1.56 billion, while analysts were projecting $1.49 billion.

"Revenue exceeded the midpoint of guidance, driven by higher-than-forecasted results from the datacenter end market,” the company commented in a note.

BMO analyst Ambrish Srivastava is positive but cut the price target to $82.00 per share from $98.00 on the lower multiple.

“Data Center continues to be a big driver for the company. Plenty of concern on all aspects of the business, but, Marvell continues to see ramps of its recent wins as well as new wins offsetting a potential weaker backdrop. Our estimates remain largely unchanged. We continue to rate shares Outperform,” Srivastava told clients.

Morgan Stanley analyst Joseph Moore also slashed the price target to $68.00 per share from $80.00.

“Marvell posted upside and guided slightly higher, with perhaps more conviction on 2H follow through than we might have expected given economic uncertainty. Still, in the wake of customer uncertainty and cloud anxiety, durability concerns seem unlikely to fade,” Moore said in a client note.