Marvell (MRVL) to report first quarter earnings: what’s at stake?

Marvell technology MRVL is scheduled to report first-quarter fiscal 2025 results on May 30, after the market closes.

For the fiscal first quarter, the company forecasts total revenue of $1.15 billion (+/- 5%). It expects non-GAAP earnings per share to be 23 cents (+/- 5 cents).

The Zacks Consensus Estimate is for revenue of $1.15 billion, down 12.9% from $1.32 billion in the year-ago quarter. The consensus earnings per share estimate was set at 23 cents per share, suggesting a decline of 25.8% compared to 31 cents in the year-ago quarter.

Over the last four quarters, Marvell’s earnings have topped the Zacks Consensus Estimate three times and matched the Zacks Consensus Estimate three times, with the average surprise being 3.1%.

Marvell Technology, Inc. Price and EPS surprise

Marvell Technology, Inc. price-eps-surprise | Quote Marvell Technology, Inc

For the fourth quarter of fiscal 2024, the semiconductor company reported revenue of $1.43 billion, topping the consensus estimate of $1.42 billion. The profit figure was also above management’s midpoint forecast of $1.42 billion (+/- 5%).

Moreover, the company reported non-GAAP earnings of 46 cents per share, which was in line with the Zacks Consensus Estimate as well as the midpoint of the company’s guidance.

Let’s see what the situation was before this announcement.

Factors to consider

Marvell’s first-quarter fiscal 2025 results are likely to be hampered by weak product demand as enterprises postpone their big IT spending plans due to macroeconomic uncertainty. Moreover, further inventory correction activities by long-term MRVL customers are likely to negatively impact the company’s overall performance in the reporting quarter.

The company benefits from investments in artificial intelligence, standard cloud infrastructure and 800-gig PAM solutions. These investments likely supported MRVL’s revenue growth.

The company is benefiting from a recovery in the data center market, which is fueling the growth of its storage products. Marvell’s electro-optical revenues are expected to remain strong and initial shipments of cloud-optimized AI silicon programs are expected to contribute to growth, partially offset by a seasonal decline in on-premises enterprise data center revenues.

Our Data Center revenue estimates for the first quarter of fiscal 2025 are $780.8 million, representing 79.2% year-over-year growth.

During its most recent earnings conference call, Marvell forecast that it would see massive, sequential revenue declines across most end-market segments. The company forecast that total Enterprise Networking revenues and carrier end-market sales would decline by 40% and 50%, respectively.

Our Enterprise Networking revenue estimate is $158.9 million, down 56.4% year-over-year. Our revenue estimate for Carrier Infrastructure is $84.9 million, down 70.7% year-over-year.

In the previous quarter’s earnings statement, the company predicted that consumer end-market revenue would decline by 70% quarter-over-quarter. Sales are expected to decline as end-of-life program deliveries ended in the previous quarter and demand in the games console market will be significantly weaker. Our model estimate suggests consumer end-market revenues will decline 69.6% year-over-year to $43.1 million.

Automotive/Industrial segment performance is expected to be impacted by an increased number of in-vehicle Ethernet-connected endpoints and increased bandwidth demands. The company will likely benefit from new Ethernet design wins with various automotive OEMs. Our fiscal 2025 first-quarter revenue estimates for the segment are $82.3 million, representing a 7.8% year-over-year decline.

What our model says

Our proven model does not clearly predict Marvell’s earnings will increase this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. However, this is not the case here.

While MRVL currently has a Zacks Rank of 2, its Earnings ESP is -0.31%. With our Earnings ESP filter, you can discover the best stocks to buy or sell before they are reported.

Stocks with a favorable combination

According to our model Dell Technologies DELL, Broadcom AVGO i REE Automotive REE has the right combination of elements to achieve record profits in its upcoming releases.

Dell Technologies has an Earnings ESP of +2.30% and is currently a Zacks Rank #2. The company is scheduled to report first-quarter 2024 results on May 30. Its earnings estimates have surpassed the Zacks Consensus Estimate in three of the following four quarters and missed once, for an average surprise of 39.9%. You can see complete list of today’s Zacks #1 ranked stocks here.

The Zacks Consensus Estimate for DELL’s first-quarter earnings is expected to be $1.25 per share, down from $1.31 in the year-ago quarter. The revenue consensus was pegged at $21.7 million, up 3.7% year-over-year.

Broadcom has an Earnings ESP of +3.66% and is currently sporting a Zacks Rank of #3. The company is scheduled to report second-quarter 2024 results on June 12. Its earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 2.8%.

The Zacks Consensus Estimate estimates AVGO earnings of $10.79 per share, up 4.6% year-over-year. The revenue consensus is set at $12 billion, up 37.88% from the year-ago quarter.

REE Automotive currently has an Earnings ESP of +5.26% and a Zacks Rank #2. The company is scheduled to release its first-quarter 2024 results on May 30.
The Zacks Consensus Estimate calls for first-quarter earnings of a loss of $1.81 per share. The REE revenue consensus was set at $0.4 million.

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