Marvelling at the opportunities the market always offers
FBR views the recent sell off of Marvell/MRVL shares - down 17% since the beginning of March - is significantly over-done. The firm sees the shares as attractively valued trading at roughly 28x their FY07 EPS estimate of $2.01, which implies a near trough level valuation. The firm continues to view Marvell as a core holding for semiconductor investors, with the recent weakness providing a rare window of opportunity for investors to build positions in one of the best performing, premier communication IC companies. In the firm's view, the recent chatter of price-wars in the HDD segment, the push-out of the Sony PS3 game console, and the general seasonal softness in the PC complex, as all weighing unduly on the shares of Marvell. In the firm's view, to be overly negative on the name at this stage misses the positive impact of several key product cycles which are still in the early stages of playing out. The firm reiterates their Outperform rating, while standing by their full-year FY07 EPS estimate of $2.01, and our 12-month price target of $75.As you know, I too regard highly this specific investment's potential and current opportunity.
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From the all time high of $73.67 reached on 27 January 2006 (#1), the shares have made a beeline decline (#2) toward gap support (#3) and its resolutely rising, 200 day simple moving average (now at $51). This places Friday's closing trade ~7% above the 200 day sma -- and crucial support; well within the 10% boundary I prefer. Both price and time corrections near their respective exhaustion.
The shares likely will gap higher on today's opening trades due to this 'news', but could also reverse down during the trading day. Nonetheless, I am exceedingly close to purchasing lot #1. If and when I do, I will try to update you via a comment reply to this post.
As always, I welcome your questions and comments...
-- David M Gordon / The Deipnosophist