We Maintain Long-Term Bullishness on Marvell Despite Weak Short-Term Guidance; FVE Trimmed to $57

We lower our fair value estimate for no-moat Marvell Technology to $57 per share, from $62, following disappointing fiscal fourth-quarter guidance that missed our expectations. Marvell is anticipating a pronounced effect on its sales from inventory corrections at storage customers next quarter, as well as some modest order pushouts elsewhere in the business. We see the former as a short-term cyclical dynamic, but one with a material impact on results over the next two to three quarters. We view Marvell’s networking sales as less prone to such cyclicality, but remind investors that storage still accounts for close to a quarter of the business. Long-term, we continue to see a double-digit top-line growth runway for Marvell, with the firm a key beneficiary of secular trends toward high-speed networking and 5G networks. Investors with a long-term horizon should still consider shares undervalued, especially after dropping 7% after hours on the print.