Get 40% Off
👀 👁 🧿 All eyes on Biogen, up +4,56% after posting earnings. Our AI picked it in March 2024.
Which stocks will surge next?
Unlock AI-picked Stocks

Buy this Great Semiconductor Stock Before Earnings for Tech Growth?

Published 02/24/2021, 09:14 PM
Updated 07/09/2023, 06:31 AM

Technology stocks have gone on a wild ride over the past several weeks. Tuesday’s craziness that saw the Nasdaq sink over 2.5% in morning trading, before recovering a large chunk of those losses by the end of the day, helps highlight tech’s standing on Wall Street.

Despite the recent setbacks, tech companies have posted impressive fourth quarter financial results and their outlooks have improved. Most of the big names, from Apple AAPL to Microsoft MSFT have already reported their quarterly results. In fact, we now have Q4 results from 91% of the technology sector’s total market capitalization in the S&P 500.

But that doesn’t mean it’s too late to find strong tech stocks to buy amid the stronger-than-projected earnings season. Now, let’s dive into Marvell (NASDAQ:MRVL) Technology Group Ltd. MRVL ahead of its Q4 fiscal 2021 financial release on March 3 to see why it might be worth buying.

Tech Update

Wall Street pulled profits out of nearly every name in technology since the Nasdaq hit records on February 12. But buyers stepped in Tuesday afternoon after the index nearly hit its 50-day moving average, and the Nasdaq then jumped 1% during regular trading Wednesday.

The recent downturn was attributed to worries about tech valuations, as Treasury yields climb. The pullback was certainly healthy, but Wall Street is hardly nervous about the technology sector’s long-term growth outlook.

Marvell’s Fundamentals

Marvell is an infrastructure semiconductor solutions firm. MRVL’s storage, network infrastructure, and wireless connectivity offerings are set to benefit from the continued growth of cloud computing and the 5G revolution.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

MRVL announced last October its plan to buy Inphi (NASDAQ:IPHI) IPHI to boost its standing and offerings within these key growth areas of tech. The deal is projected to close by the second half of this calendar year.

In a showcase of its growth and size, Marvell was added to the NASDAQ-100 Index in December. This puts it in the same ballpark as chip firms such as Nvidia NVDA and Broadcom (NASDAQ:AVGO) AVGO, as well as nearly all of the biggest tech names in the world.

MRVL stock has soared 415% in the last five years to blow by the Zacks Tech Sector’s 175% and its industry’s 80%. More recently, it is up 120% in the trailing 12 months. Investors might also find a juicier entry point since the stock has cooled off recently. Marvel is currently trading around 10% below its January records at roughly $49 per share.

The recent downturn has pushed its RSI to 45, which is below levels that are considered neutral. For instance, any number above 70 on the Relative Strength Index is often regarded as overbought, while anything below 30 is oversold. And Marvel stock popped during regular trading Wednesday, amid the tech rebound.

Wall Street has been willing to pay a slight premium for MRVL shares compared to its industry for years. It currently trades near its six-month median of 8.8X forward sales, which marks a discount to giants such as Microsoft’s 10.1X and Nvidia’s 17.6X.

What Else

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Zacks estimates call for Marvel’s fourth quarter revenue to climb 10% to reach $786.2 million, with its adjusted earnings projected to surge 71% to $0.29 a share. More broadly, its fiscal 2021 sales are expected to jump 10% to roughly $3 billion to help lift its EPS by 41%.

MRVL’s FY22 outlook appears even more impressive, with its revenue expected to surge 18% higher to $3.5 billion, while its earnings are set to come in 46% stronger.

Marvell’s Semiconductor–Communications space, which includes NeoPhotonics (NYSE:NPTN) NPTN and others, sits in the top 8% of our over 250 Zacks industries. Plus, 16 of 22 brokerage recommendations that Zacks has for the stock come in at a “Strong Buy,” with none below a “Hold.” And Marvell pays a dividend that is currently yielding roughly 0.50%.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Microsoft Corporation (NASDAQ:MSFT): Free Stock Analysis Report

NVIDIA Corporation (NASDAQ:NVDA): Free Stock Analysis Report

Apple Inc. (NASDAQ:AAPL): Get Free Report

Marvell Technology Group Ltd. (MRVL): Free Stock Analysis Report

Broadcom Inc. (AVGO): Free Stock Analysis Report

NeoPhotonics Corporation (NPTN): Get Free Report

Inphi Corporation (IPHI): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.