Marvell Technology slips on results, but analysts say long-term looks intact
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Marvell Technology (NASDAQ:MRVL) shares trimmed their losses, but remained down by almost 2% Friday as analysts noted that the company's long-term trends are intact, even if it is dealing with a painful "reset and a weaker-than-expected third-quarter report and forecast.
Cowen analyst Matthew Ramsay, who has an outperform rating on Marvell (MRVL) shares, noted that despite the inventory correction that impacted the quarter and outlook, the company's long-term growth drivers, such as cloud computing, 5G, custom silicon and automotive are still intact. 
"Overall, despite [near-term] weakness and broad inventory digestion, we remain positive on underlying secular demand drivers in Marvell's key Cloud and 5G segments, with Auto beginning to gain traction as well," Ramsay wrote in a note to clients.
Ramsay added that Marvell (MRVL) is "well positioned" to benefit from strong datacenter product cycles and the launch and ramp of new CPU and GPU platforms from Intel (INTC), Advanced Micro Devices (AMD) and Nvidia (NVDA) in 2023. 
Nonetheless, Ramsay lowered his estimates for fiscal 2024 amid the inventory correction that the company called out relating to its storage business as well as cautious commentary surrounding its wired infrastructure and consumer businesses.
Stifel analyst Tore Svanberg, who has a buy rating on Marvell (MRVL), noted that the profitability in the third-quarter was "impressive," citing its 64% gross margins and 36.7% operating margins, but the ongoing correction is likely to weigh on sentiment, at least in the near-term.
"While we have lowered our [estimated 2024] revenue growth to +1.1% [year-over-year], we note this comes off a strong [fiscal 2023] (on track for +37.4% year-over-year) and remains on track for outperformance vs. peers [Analog Devices (ADI), NXP Semiconductors (NXPI), Texas Instruments (TXN)], with broader industry expected to contract in [calendar year 2023]," Svanberg wrote in a note to clients.
Intel (INTC), AMD (AMD), Nvidia (NVDA), Analog Devices (ADI), NXP Semiconductors (NXPI) (TXN) all fell at least 2.5% following the results. Competitor Texas Instruments (TXN) declined less than 2%.
Wells Fargo analyst Gary Mobley, who has an overweight rating on Marvell (MRVL), said the reset was something investors wanted, "albeit more significant than anticipated."
"We suspect the inventory draw-down creates a [revenue] headwind of ~6-7% in [the first-half of fiscal 2024] before normalizing in [the second-half]," Mobley wrote. "We would use any weakness in shares as a buying opportunity."
For the period ending October 29, Marvell (MRVL) earned 57 cents per share, excluding one-time items, on $1.54B in revenue. The company said inventory reductions, in particular at the company's storage customers, impacted the results.
Analysts were expecting the company to earn 59 cents per share on $1.56B in revenue.
Looking ahead, Marvell (MRVL) said it expects fourth-quarter revenue to be between $1.33B and $1.43B, below the $1.62B that analysts were expecting. Inventory reductions were also blamed for the lackluster guidance.
Last month, Credit Suisse initiated coverage on the semiconductor industry with an overweight rating, highlighting Marvell Technology (MRVL) among several other companies due to their long-term growth potential.