Marvell dips as weak guidance, 'mixed quarter' overshadow long-term trends
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Marvell Technology (NASDAQ:MRVL) dipped on Friday as the semiconductor company reported results and issued guidance that fell just shy of estimates, even though Wall Street analysts noted that the company's long-term opportunities are still intact.
Morgan Stanley analyst Joseph Moore, who has an equal-weight rating on Marvell (MRVL), called the second-quarter results "solid... all things considered," but added that certain trends in the data center business caused some anxiety, given that the area has been a stalwart amid slowing spending in consumer tech.
"We had expected a mixed quarter, given inventory excess in hard disk drive and networking, with supply/demand approaching equilibrium in those markets, and we expected cloud to be strong," Moore wrote in a note to clients, adding that the overall numbers look mostly like what was expected, but with a slightly different composition. 
Moore also pointed out that supply chain issues are still resolving themself and lead times are coming down, but new challenges have emerged, especially in the data center, largely due to supply.
"Our general expectation is that hyperscale can resume growth - albeit more slowly, next year - while there will continue to be some headwinds on the on premise side," Moore continued. 
"In general, parsing supply and demand issues at this point becomes somewhat challenging, as we have just seen in consumer markets (where smartphone and PC decelerations started out as a supply problem)."
Marvell (MRVL) shares fell 3.5% to $53.08 in premarket trading.
Deutsche Bank analyst Ross Seymore, who has a buy rating and a $65 price target on Marvell (MRVL), noted that the results were choppy, but the company's growth is still seen as "compelling."
Seymore noted that Marvell's (MRVL) continued evolution towards data infrastructure markets, which would make up roughly 90% of revenue, will eventually "significantly lower its volatility." 
And when combined with new design wins that start next year, including more than $400M in cloud data center products and continued growth in 5G and auto, investors should "feel confident" that Marvell (MRVL) can deliver the growth necessary for investors from both a fundamental and valuation standpoint.
Ahead of earnings, Wells Fargo said last week that it's possible Marvell Technology's (MRVL) backlog may have peaked, adding that the company is "not immune" from macro challenges.