Marvell Technology: Huge Potential Margin Expansion Opportunity

Summary

• Marvell Technology has experienced poor margins due to high R&D expenses and increasing D&A and SG&A expenses, largely due to its acquisition strategy. However, MRVL expects to see improved net margins in the future as it aims to reduce operating costs.
• The company's revenue is projected to grow at an average annual rate of 18.5% over the next five years, with a forecasted net margin of 8.58%. Its valuation, based on a DCF valuation approach, yields a price target of $78.88, indicating a 35% upside.
• A potential risk for Marvell is the US-China trade war, as China is the largest source of revenue for the company. The restrictions on semiconductor exports to China could dampen demand for Marvell's products.

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In our previous coverage of Marvell Technology, Inc. (NASDAQ:MRVL), we conducted a comprehensive comparison between Marvell and Broadcom (AVGO), focusing on their logic and analog semiconductor segments. Additionally, we analyzed their M&A strategies by assessing

Analyst’s Disclosure:I/we have a beneficial long position in the shares of MRVL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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