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Why Marvell Technology Stock Jumped 22% Last Month

By Keith Noonan – Updated Jun 8, 2020 at 12:09PM

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The networking-semiconductor specialist's stock is now up roughly 32% year to date.

What happened

Shares of Marvell Technology (MRVL 3.71%) gained 22% in May, according to data from S&P Global Market Intelligence. The stock climbed in conjunction with market momentum and then saw a pronounced jump following the company's first-quarter results report at the end of the month.

^SPX Chart

^SPX data by YCharts.

On May 27, Marvell published first-quarter sales that topped the market's expectations, significantly boosting the share price. Sales for the period climbed roughly 5% year over year to reach $693.64 million, and earnings per share for the period came in at $0.18. The average analyst estimate had anticipated revenue of $678.7 million and EPS of $0.14.

Marvell's Prestera CX8500 chip.

Image source: Marvell.

So what

Despite some headwinds from the coronavirus, Marvell posted better-than-expected results in the first quarter thanks to strong performance from the company's data center and 5G infrastructure end markets and its networking business. Revenue for the period was down approximately 3% on a sequential basis, but sales were roughly flat versus Q4 after accounting for the company's divestiture from its Wi-Fi connectivity business.

Marvell's stock gains last month followed an 18.2% increase for its share price in April.  

Now what

The stock has continued to climb early in June's trading, with shares up roughly 7.6% in the month so far. 

^SPX Chart

^SPX data by YCharts.

Marvell is targeting sales of roughly $720 million in the second quarter, representing growth of roughly 9.6% year over year. Adjusted EPS is forecast between $0.17 and $0.23, good for 25% year-over-year growth at the midpoint of the target. Management expects tailwinds from companies upgrading to 5G technologies and said that it sees enterprises rapidly upgrading their network infrastructures and favorable outlooks in the data center cloud, enterprise, and automotive categories. 

Marvell stock trades at roughly 38 times earnings estimates and 7.8 times expected sales. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Marvell Technology Group Ltd. Stock Quote
Marvell Technology Group Ltd.
MRVL
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