Marvell Technology (MRVL +6.33%) stock had a marvelous start to 2024, rising 41% until ... well, until it delivered a big disappointment on Friday. In its earnings report for the fourth quarter of its fiscal 2024, Marvell merely met Wall Street's targets for quarterly earnings -- $0.46 per share, adjusted for one-time items -- and for sales of $1.4 billion. Management also predicted a 42% earnings miss next quarter.
Investment bank Morgan Stanley cut Marvell's price target to $71, and after a quick selloff, the stock sits just above that level now. Is it a buy or a sell?
NASDAQ: MRVL
Key Data Points
Is Marvell Technology stock a sell?
Marvell warned that adjusted earnings for the first quarter of fiscal 2025 would range from $0.18 to $0.28 per share, versus a Wall Street target of $0.40. Sales are expected to come in around $1.15 billion, 16% short of expectations.
Now, the good news is that this is such bad news that the Morgan Stanley analyst believes "it should [mark] the bottom" of the semiconductors cycle for Marvell, and things should start to improve after April. The bad news, though, is that if Q1 sales come in at $1.15 billion, that would mark a 13% decline year over year. Marvell's slight sales growth in Q4 had broken three straight quarters of declines, so it needs some business momentum.
This, in a nutshell, is probably what's making investors nervous. Everyone wants to time the semiconductor cycle just right -- to "buy at the bottom" so as to maximize their profits. And yet, for Marvel, the bottom that everyone thought happened in Q3 has just proved false. Fiscal Q1 2025 will plumb an even deeper bottom instead.
But keep in mind: You may not be able to time the market, but you can at least put more time in the market. Buying Marvell when Morgan Stanley is telling everyone else to sell, and the stock is down, but then holding well into the next upcycle should be a good way to maximize your chances of earning a healthy profit on this stock.
