It’s been a poor week for Marvell Technology Group Ltd. (NASDAQ:MRVL) shareholders, with the stock having fallen 14% to US$41.51 in the week since its last annual results. Statutory results were mixed overall, with revenue of $3.0 billion in line with analysts’ forecasts, but losses of $0.41 per share, about 3.5% higher than analysts expected. Earnings are an important time for investors because they can follow a company’s performance, watch what analysts predict for the next year, and see if there has been a change in sentiment towards the company. So we’ve rounded up the latest post-earnings guidance to see what the estimates suggest for next year.
Given the latest results, the most recent consensus for Marvell Technology Group from 26 analysts is for revenue of US$3.49 billion in 2022, which, if achieved, would represent a solid 18% increase from its sales over the last 12 months. Earnings are expected to improve, with Marvell Technology Group expecting to report statutory earnings of $0.37 per share. Prior to this earnings report, analysts were forecasting revenue of US$3.46 billion and earnings per share (EPS) of US$0.41 in 2022. Analysts appear to have become a bit more negative on the company after the latest results, given the minor degradation. to their earnings per share for next year.
The consensus price target held steady at US$52.92, with analysts apparently voting that their lower expected earnings should not cause the stock price to decline for the foreseeable future. This is not the only conclusion we can draw from this data, however, as some investors also like to take into account the discrepancy in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Marvell Technology Group at US$64.00 per share, while the most bearish values it at US$35.00. As you can see, analysts aren’t all in agreement on the stock’s future, but the range of estimates is still reasonably narrow, which might suggest the outcome isn’t entirely unpredictable.
Looking now at the big picture, one way to understand these forecasts is to see how they compare to past performance and industry growth estimates. It is clear from the latest estimates that Marvell Technology Group’s growth rate is set to accelerate significantly, with an annualized revenue growth forecast of 18% through the end of 2022 significantly faster than its historical growth of 4 .8% per year over the past five years. In contrast, our data suggests that other companies (with analyst coverage) in a similar industry are expected to grow revenue by 8.3% annually. Taking into account the expected revenue acceleration, it’s pretty clear that Marvell Technology Group should grow much faster than its industry.
The most important thing to remember is that analysts have lowered their earnings per share estimates, which shows that there has been a clear drop in sentiment following these results. Fortunately, there have been no major changes to the revenue forecast, with the business still expected to grow faster than the industry as a whole. There was no real change from the consensus price target, suggesting that the company’s intrinsic value has not undergone major changes with the latest estimates.
With that in mind, we wouldn’t be too quick to come to a conclusion on Marvell Technology Group. Long-term earnings power is much more important than next year’s earnings. We have forecasts for Marvell Technology Group through 2026, and you can view them for free on our platform here.
And what about the risks? Every business has them, and we’ve spotted 2 warning signs for Marvell Technology Group you should know.
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