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Marvell Technology Hits 52-Week High: Should You Hold?
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Shares of Marvell Technology Group Ltd. (MRVL - Free Report) hit a new 52-week high of $13.06 on Sep 2, 2016, eventually closing at $13.01. The shares have been particularly buoyant in recent times, jumping 15.1% over the past one month. The closing share price also represents a strong one-year return of 19.9% and a year-to-date return of 47.5%.
The price increase was supported by a significant rise in share volume. Average volume of shares traded over the last three months was approximately 6.08M.
What is Driving the Stock Upward?
This price appreciation can be attributed to strong demand for Marvell’s 4G LTE products. This is supported by growth from the company’s wide range of newly-launched Internet of Things (IoT) solutions.
Marvell recently released its new product, 88NV1160 Non-Volatile Memory (NVM) Express DRAM-less SSD controller to meet the growing demand for personal storage and to cater to the media and entertainment market. The company is benefiting from growing demand for SSD (Solid State Drive) products and has made significant investments to launch these to meet pent up demand. With these launches, we expect Marvell to strengthen its market position against competitors like Intel Corp. (INTC - Free Report) .
Marvell is a fabless company. It does not have to own or operate foundries for the production of silicon. Instead, it works with independent merchant foundries and chip assemblers for the manufacturing of products. Marvell’s customers are original equipment manufacturers (“OEM”) and original design manufacturers, both of which design and manufacture end market devices. This benefits the company with superior manufacturing capability, scalability, as well as flexibility to develop complex SoC (System on Chip) and SiP devices that offer superior technology and services at competitive prices.
Moreover, the company provided an encouraging second-quarter fiscal 2017 guidance while announcing its quarterly results on Jul 27, 2106.
Marvell expects second-quarter fiscal 2017 revenues in the range of $625 million – $635 million, higher than the Zacks Consensus Estimate of $630 million. The company expects non-GAAP earnings per share to be 10 cents to 12 cents while the Zacks Consensus Estimate is pegged at 6 cents.
Furthermore, Marvell is a cash rich company having a strong balance sheet. Cash rich companies not only guarantee protection but are also likely to reward shareholders from their deep cash balances through dividends and share repurchases. Marvell generated $205.4 million of cash from operating activities in fiscal 2016 and exited the first quarter of fiscal 2017 with cash, cash equivalents and short-term investments of $1.62 billion. Moreover, since it carries no long-term debt, the cash is available for pursuing strategic acquisitions, investment in growth initiatives and distribution to shareholders.
However, competition in the semiconductor market from major players such as Intel and Texas Instruments Inc. (TXN - Free Report) remains a headwind.
A better-ranked stock in the technology sector is Seagate Technology plc (STX - Free Report) , sporting a Zacks Rank #1 (Strong Buy).
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Marvell Technology Hits 52-Week High: Should You Hold?
Shares of Marvell Technology Group Ltd. (MRVL - Free Report) hit a new 52-week high of $13.06 on Sep 2, 2016, eventually closing at $13.01. The shares have been particularly buoyant in recent times, jumping 15.1% over the past one month. The closing share price also represents a strong one-year return of 19.9% and a year-to-date return of 47.5%.
The price increase was supported by a significant rise in share volume. Average volume of shares traded over the last three months was approximately 6.08M.
What is Driving the Stock Upward?
This price appreciation can be attributed to strong demand for Marvell’s 4G LTE products. This is supported by growth from the company’s wide range of newly-launched Internet of Things (IoT) solutions.
Marvell recently released its new product, 88NV1160 Non-Volatile Memory (NVM) Express DRAM-less SSD controller to meet the growing demand for personal storage and to cater to the media and entertainment market. The company is benefiting from growing demand for SSD (Solid State Drive) products and has made significant investments to launch these to meet pent up demand. With these launches, we expect Marvell to strengthen its market position against competitors like Intel Corp. (INTC - Free Report) .
Marvell is a fabless company. It does not have to own or operate foundries for the production of silicon. Instead, it works with independent merchant foundries and chip assemblers for the manufacturing of products. Marvell’s customers are original equipment manufacturers (“OEM”) and original design manufacturers, both of which design and manufacture end market devices. This benefits the company with superior manufacturing capability, scalability, as well as flexibility to develop complex SoC (System on Chip) and SiP devices that offer superior technology and services at competitive prices.
Moreover, the company provided an encouraging second-quarter fiscal 2017 guidance while announcing its quarterly results on Jul 27, 2106.
Marvell expects second-quarter fiscal 2017 revenues in the range of $625 million – $635 million, higher than the Zacks Consensus Estimate of $630 million. The company expects non-GAAP earnings per share to be 10 cents to 12 cents while the Zacks Consensus Estimate is pegged at 6 cents.
Furthermore, Marvell is a cash rich company having a strong balance sheet. Cash rich companies not only guarantee protection but are also likely to reward shareholders from their deep cash balances through dividends and share repurchases. Marvell generated $205.4 million of cash from operating activities in fiscal 2016 and exited the first quarter of fiscal 2017 with cash, cash equivalents and short-term investments of $1.62 billion. Moreover, since it carries no long-term debt, the cash is available for pursuing strategic acquisitions, investment in growth initiatives and distribution to shareholders.
However, competition in the semiconductor market from major players such as Intel and Texas Instruments Inc. (TXN - Free Report) remains a headwind.
At present, Marvell has a Zacks Rank #3 (Hold).
MARVELL TECH GP Price and Consensus
MARVELL TECH GP Price and Consensus | MARVELL TECH GP Quote
Stock to Consider
A better-ranked stock in the technology sector is Seagate Technology plc (STX - Free Report) , sporting a Zacks Rank #1 (Strong Buy).
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>