Rosenblatt Reiterates Buy on Marvell, $300 Price Target

Rosenblatt analyst Sajal Dogra reiterated a Buy rating and $300 price target on Marvell (NASDAQ: MRVL).

“MRVL has created enormous value through semiconductor M&A over the past decade, largely due to natural scale advantages in silicon and monetizing acquired IP across a broader customer and product footprint.

The economics are powerful in leading-edge fabless semis, where scale and cost synergies can drive 20% (or more) of the acquisition price.

That is likely not true with the potential LITE (covered by Mike Genovese) deal, though we are sympathetic to the idea of capturing more optical content per link.

MRVL operates a fabless model, while LITE is a capital-intensive manufacturing model exposed to industry supply-demand dynamics.

LITE’s laser technology and InP capacity are valuable, but we question if ownership creates sufficient incremental economics.

Finally, with MRVL projecting ~65% interconnect revenue CAGR through CY30, we expect MRVL’s DSP franchise to maintain its dominant market position.

Considering the ~$100B deal size and AI exposure, we see the deal taking 12-18 months to close, including an extended China SAMR review.

With limited synergies, we model the deal to be 5.0%/2.4% dilutive to our CY28/CY29 estimates. LITE shares rose just 0.6% despite the news, on a day when SMH fell ~1.1%.

We believe this reflects the market assigning a low probability of completion and/or a limited potential control premium. We maintain our Buy rating and $300 price target.”

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