Analyst Harlan Sur noted that the ramp of 5G at handset maker Samsung is strong and that momentum will continue into fiscal 2021 as Samsung broadens its 5G buildout to include Japan and the U.S. Marvell provides 5G chips for Samsung phones.
While J.P. Morgan has a base case of annual 5G revenue of $600 million for Marvell, there is a potential for that revenue to increase to $1 billion annually over the next few years with Samsung estimated to bring in between $450 million and $550 million, Nokia accounting for between $250 million and $350 million, and Avera adding between $150 million and $200 million.
Marvell could face headwinds from its enterprise networking segment due to weakness in demand from the campus/enterprise markets. However, that headwind is offset by strong demand for 5G chips.
“Despite a demand pause in its enterprise/campus networking segment, the team’s design win pipeline continues to expand in multi-gig Ethernet (Aquantia/Marvell portfolio) and automotive Ethernet,” Sur wrote. J.P. Morgan maintained its overweight rating on the stock, in step with another call from Rosenblatt Securities.
Rosenblatt reiterated a buy rating and $32 price target on the stock. Rosenblatt’s price target represents a potential 35% upside from the stock’s previous closing price.
Marvell was rising 1.56% to $24.05 in premarket trading Wednesday.