Marvell (MRVL): Fourth Quarter Earning Preview

Shares of Marvell (NASDAQ: MRVL) are trading down today before the company releases its fourth quarter earnings, expected after the market closes on Thursday, March 4, 2010. Shares are down 1.03% to $20.17 in the late-morning session, on a relatively 'up' day in the market.

MRVL is expected to post an EPS of $0.37 on revs of $840.89 million. The company posted a solid Q309 with a $0.35 EPS and $803.1 million in revs. Last year, for Q408, Marvell beat estimates with a $0.05 EPS and revs of $513 million. The company also cut 15% of their jobs since then.

Shares of Marvell shot up 26.9% through Q409, from $13.73 at the close October 30, 2009, to $17.43 at the close on January 29, 2009. The stock also gained 211% through 2009.

Data from Bloomberg shows that 27 analysts have a Buy rating on the stock, 6 have a Hold, and 0 recommend to Sell Marvell. The analyst average price target is $23.52, with the high at $28, and the low $18.

Analyst Ratings Through Q409
In early November, Bank of America Merrill Lynch downgraded the entire sector of semiconductors. The reason was mostly based on their cyclical framework suggesting a modest inventory correction. Click Here for more color.

BMO started Marvell at an Outperform rating with a $23 price target.

In December, Brigantine Advisors maintained their Buy rating while raising their price target to $23 from $20. The increase represented a 27% premium to the closing price of $18.06 on the day.

Broadpoint.AmTech, on the same day, also reiterated their Buy rating and increased their price target to $23. They believe that there is strength on end-market demand and new product ramps. They see Marvell as a solid play on the PC recovery.

Kaufman upgraded Marvell to Buy from Hold, and an increased price target of $25, from $20 prior.

Analyst Preview
According to a recent report from Goldman Sachs, summarizing the SIA [Semiconductor Industry of America] data, they believe that there could be record Y/Y growth for 2010. Though integrated circuit shipments were down 1% M/M for January, and up 1% M/M excluding memory, this is a significant upside to the seasonal swing of being down 12% and 13% respectively. Goldman sees Y/Y growth of 30%or more based on improving demand...potentially the best year in the sector since 2004.

Deutsche Bank sees Marvell putting up good Q409 numbers. Deutsche sees the market for Enterprise Networking and Computing as firm, and MRVL derives about 70% of their revs from that market. Also sales in Cellular handsets, about 15% of revs, tracked better than expected. The see Marvell at or close to the high end of guidance, and have a $0.36 EPS expectation on the company with $830 million in revs.

Kaufman Bros. is also positive on Marvell posting some good numbers for Q409. The firm sees smart phone sales tracking better than normal seasonal declines, and storage and networking at mid- to high-single-digit Q/Q revenue growth. They see Marvell gaining in its semiconductor business, and gaining market share in the storage market. Kaufman still has the Buy rating and $25 price target that they put on the company in December.

Finally, J.P. Morgan believes in Marvell, and believes that they will report above J.P. Morgan's already above-the-consensus estimates. They see growth with the company's storage semiconductor business. Marvell supplies Western Digital (NYSE: WDC), Samsung, and Toshiba. all of which saw Q409 revs growth about 11% on average. They believe that Marvell could grow that unit by the same rate, though they have an estimate of 7% Q/Q. They see the networking business growing as well, spearheaded by new ASIC product ramps at Cisco (NASDAQ: CSCO) and Juniper (NASDAQ: JNPR) fir 1Gb and 10Gb applications.

Marvell, Inc. is expected to release their earnings for Q409 on Thursday, March 5, 2010, at 4:00pm (EST). Stay tuned to Streetinsider.com's Earnings section to see our analysis of the highly-anticipated quarterly results within seconds of their release.

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