Marvell Could Beat Market By 35%
Maya Roney, 05.18.06, 8:51 AM ET
Marvell Technology Group's compelling valuation makes it one of the best ideas in communications semiconductors, according to research firm Cowen & Co.
"We recommend that investors use the current share weakness as an opportunity to build positions, ahead of what we expect to be a strong second half for the company," wrote analyst Jim Liang in a report Wednesday.
Liang expects Marvell (nasdaq: MRVL - news - people ) shares to outperform the market by 35% over the next 12 months, driven by positive hard-disk drive seasonality and multiple product cycles.
With the stock off meaningfully from its recent high, the analyst believes the shares have discounted much of the risk, including the potential discontinuance of its MXO 160GB desktop platform following its merger with Seagate Technology (nyse: STX - news - people ), and ongoing PC market softness.
Marvell reports fiscal first-quarter results on Thursday. Liang anticipates an in-line fiscal first quarter, with guidance slightly better than current consensus expectations. He is modeling for earnings of 43 cents per share on revenue of $518 million.
Given heightened cyclical concerns about the communications semiconductors group due to some inventory build by contract manufacturers and distributors, the analyst said the group would be range bound near term.
"In this environment, our advice is to focus on product cycle stories that can power through any potential cyclical industry pause," Liang noted.
In addition to Marvell, Cowen's other "best idea" is SiRF Technology Holdings (nasdaq: SIRF - news - people ). The research firm has "outperform" ratings on both stocks. |
