Marvell’s First Half Looks to Be Rough, but We’re Confident in a Recovery and Still See Big Upside

We trim our fair value estimate for Marvell Technology to $54 per share, from $57, behind lowered expectations for fiscal 2024. Marvell’s fiscal fourth-quarter results were largely in line with our expectations, but guidance for the first quarter indicates further declines before a recovery. We retain confidence that long-term underlying demand for Marvell isn’t under threat, but inventory corrections, particularly of the severe kind for storage drives, will weigh heavily on fiscal 2024 results. The data center and enterprise markets, Marvell’s two largest, are particularly affected. Nonetheless, we expect the firm to see a sharp rebound when current digestion subsides, and continue to see Marvell’s portfolio as differentiated, moaty, and able to outperform its underlying markets in the long run. The market reacted more harshly to the quarter than we did, with shares down 9% after hours. We still see significant upside in Marvell for long-term investors.