Marvell Technology's Future Outlook Improving
Company has been beating estimates, and current estimate has been edging up, too.
Asian stocks rose overnight. The Hang Seng and the Nikkei were up 1.03% and 2.2%, respectively. European stocks were higher in early trading, too. And here in the US, we're currently trading higher.
The Bermuda-based chipmaker was out with its fourth-quarter numbers after the bell last night. It turned in $0.40 a share excluding items, which was north of the $0.37-a-share estimate. It also beat on the top line (although I'm getting the sense that some didn't think the top line was quite strong enough), and painted a fairly decent picture for the first quarter. But the shares were off a bit in after-hours action last night.
1. I can't say that this is the most attractive story on the Street, but the company has been pretty consistently beating analyst estimates and the current year estimate has been edging up, which sure is nice to see.
2. My sense is that a sell-off could be a nice opportunity. As I said in an article back in early December, I think the shares would be more fairly valued north of $20, and I still feel that way. This wasn't a bad quarter by any stretch, and I'd like to think the future outlook is improving.
Justin Sharon points out in his article this morning that Citi took the stock off its Top Picks Live list.
Don't get me wrong -- I have a generally positive outlook and I think the outlook for office supplies will kick up a notch with a revival in the domestic economy. However, the job situation still isn't all that terrific. Despite the hubbub about today's number, many companies are still struggling, there's an enormous amount of competition in this space from Staples (SPLS) and Office Depot (ODP), and then there's Walmart (WMT), which sells many similar items. Additionally, OfficeMax trades at more than 30 times this year's estimate. Given all this, I won't be bellying up.
JPMorgan upped the company to Overweight, as Justin Sharon explains in Upgrades & Downgrades: TiVo Rewinds to Glory Days.
1. I see a good potential trade here. I think the upgrade will draw lots of eyes, and so will the stock hitting new highs. In the near-term, this ball could keep on rolling.
2. That said, I wouldn't chase it too high because it's expected to turn in big losses this year and next. When the excitement dies down, there could be a decent-sized pullback.
Bloomberg reports that Cowen upped its rating to Outperform, which caught my eye.
Although there's a chance the shares could get a little goose on the heels of the news, I'm not a bull by any stretch. Its recent losses are a big downer, as are the feeble earnings it's expected to spit out next year. As I mentioned yesterday in Five Reasons to Sit Out Ciena, if it got down to the lower double-digits, I may take a more serious look, but until then (or until I see some sizable catalyst on the horizon), I'll take a big ol' pass.
Have a great day and an even better weekend!
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