Marvell Technology Group (MRVL), a worldwide semiconductor provider of embedded microprocessors, digital signal processors, and analog and mixed-signal integrated circuits, has been on quite a roller coaster across the past six months. Though the market as a whole has been unpredictable and relatively volatile, MRVL has been especially temperamental.

MRVL moved down to $36 in early November. The stock then climbed up to $45 within weeks. MRVL traded sideways until early to mid-January, when it jumped up to $54. The stock then dipped right back down to $40 in early March, jumped to $48 in mid-March, and is now hovering around $49.

Is MRVL worth buying around $49 per share, or should investors hold off until more profit is taken off the table? Let’s find out.

MRVL Points of Note

MRVL has a somewhat concerning forward P/E ratio of 36.18. This is a relatively high forward P/E ratio. Yet, MRVL is a tech stock, so the elevated ratio isn’t as troublesome as it would be with a value stock. MRVL bulls rightfully point to the fact that the company makes money from breakthrough 5G technology. In fact, few stocks are benefiting as much as MRVL from the transition to 5G. 

MRVL delivered just under $800 million of revenue in the quarter, a hike of 11% compared to the same period in the prior year. If everything goes as planned, MRVL revenue will reach $800 million or more in subsequent quarters. If MRVL revenue reaches $800 million for the first quarter of the year, it will constitute a 15% increase year over year.

The ever-expanding 5G infrastructure is fueling MRVL’s top-line growth. The demand for 5G service will only increase in regions across the globe in the months and years ahead. MRVL created a chip platform with Samsung to boost the performance of these already lightning-fast networks. 

The relationship with Samsung is important as the company has rapidly scaled its 5G infrastructure in recent months. Keep in mind that the 5G market is poised for a compound annual growth of near 60% across the next six years, so MRVL revenue should continue to rise as we progress through the 5G transition.

It is also worth noting demand for MRVL’s baseband processors to be deployed within 5G base stations is gaining steam. MRVL executives insist its networking revenue will pop by 20% on a year over year basis due to the rise in demand.

MRVL According to Analysts

While revenue is expected to increase, analysts don’t expect the stock to move significantly higher. The stock’s average target price of $51.08 represents a potential 1% upside, which isn’t much. The high analyst target price is $60, while its low target price is $39. Of the 28 analysts who have issued recommendations for MRVL, seven consider it a Hold, fourteen consider it a Buy, and seven consider it a Strong Buy.

MRVL POWR Ratings

The stock has an overall grade of C, translating into a Neutral rating in our POWR Ratings system. It has grades of Cs in the Stability and Sentiment components and a D in the Value component. To access the rest of MRVL’s grades, click here. Of the 99 stocks in the B-rated Semiconductor & Wireless Chip industry, MRVL is ranked 84th. You can find the top stocks in this industry by clicking here. 

Buy, Sell or Hold?

MRVL is a Hold for now. The stock has a Neutral rating in the POWR Ratings, with a Value Grade of D due to a forward P/E ratio near 40. The company does have a bright future ahead of it, so keep an eye on the POWR Ratings to see if it is upgraded to a Buy or Strong Buy in the weeks and months ahead.  

MRVL shares . Year-to-date, MRVL has gained 1.24%, versus a 10.41% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...

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