Marvell Technology: Key Recent Events Should Drive This Tech Stock Higher

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 |  About: Marvell Technology Group, Ltd. (MRVL)
by: Bret Jensen

Marvell Technology (NASDAQ:MRVL) has not done much for its shareholders over the past year. However, recent announcements and catalysts should finally drive stock price appreciation for these undervalued shares.

Key announcements and catalysts for Marvell:

  • Added $500mm to its authorized buyback to repurchase shares.
  • Marvell will also start paying a dividend for the first time, starting at 6 cents a quarter.
  • Adjusted earnings came in at 23 cents a share, above estimates of 20 cents a share.
  • Gave a positive outlook for next quarter based on the growth in the Chinese mobile space.

4 reasons MRVL is undervalued at just over $13 a share:

  • It has a robust balance sheet with almost $4 a share in net cash (Approximately 30% of market capitalization).
  • The stock sells for just over 9 times forward earnings, a steep discount to its five year average (18.3).
  • MRVL sells for 10 times operating cash flow and has a five year projected PEG of under 1 (.76).
  • It is significantly under the median analysts' price target of $19 by the 31 analysts that cover the stock. Based on these recent events, I would look for the consensus target to move up in the near term.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in MRVL over the next 72 hours.