Marvell Technology (MRVL, Financial) is experiencing strong growth across the board. It should gain from the strong growth prospects in the end-markets. Its hard disk drive and solid state drive solutions look pretty promising in the long-run. Also, it should benefit from strong growth in its networking and mobile business going forward that has picked up the pace.
Storage market is a prospective driver
Marvel sees potential growth attached to its hard-disk drive (HDD). The company is realizing strong demand for its storage products for cloud-based and client application. Its 500 gigabyte per platter looks very appealing in the market as it is gaining a lot of traction in the enterprise drives. Marvel expects this technology to play a vital role in its growth in the future. Increased unit shipments have almost double in the reported quarter that is winning extra share gain for the company in in the enterprise drives. Its storage market has improved 3% on the sequential basis.
Moreover, the company is investing aggressively in HDD technologies that should assist Marvel to win additional market share and reinforce its position in the market going forward. Alongside, it is observing growth for its SSD solutions. Its SATA and PCI SSD controllers at multiple customers should enhance its growth in the future. Besides, the company has launched couple of new products that should further augment its SSD offerings. It has recently launched fifth generation SATA product that has relatively a new LDPC technology to support 3D NAND. The company expects this product to additionally support for 15 nanometer 2D NAND as well.
In addition, Marvel has launched a low cost, higher performance PCIe-based SSD solution of late. It has additionally announced high-end enterprise PCI products primarily for data centers that should fetch extra market share in high-end client market. Marvel already has potential customers in high-end client market. Also, the company remains on track to invest aggressively in SSD solutions due to strong growth potential for this segment in the future.
According to StorageNewsletter.com , the global shipment for SSD in PCs is expected to increase by a factor of seven through 2017. This means that this strong outlook will allow the companies to claim approximately one-third of the market for PC storage solutions by 2017. Also, the SSD shipment in PCs is forecasted to surge approximately 227 million units in 2017, which is about 600% more than 31 million in 2012. However, the shipment of PC HDDs is anticipated to drop 14% to about 410 million in 2017, as compared to 475 million in 2012.
Networking and mobile businesses in focus
Marvel is seeing incredible growth attached to its networking and mobile businesses. Its Ethernet product lines spread across data center, enterprise and service providers had strong double digit growth in the reported quarter. Also, the company is seeing improvement in customer base in North America, primarily for IT networking for enterprise and data center solutions.
With the growing adoption of 4G LTE in smartphones, Marvel should even get better with its performance going forward. Additionally, Marvel should benefit from its expanded customer list from tier 1 OEMs to tier 2 OEMs that should accelerate performance for top line. Also, its chipset solutions are expected to be integrated in new smartphones in China that should certainly drive its growth in the coming years.
Furthermore, it is experiencing an expansion of its 4G LTE products in Europe as well. Therefore, this unveils another area of growth for Marvell that should accelerate sales for its chipset solutions with the increase of higher LTE smartphone shipments.
Conclusion
The stock offers plenty of returns on investment. It is trading at the trailing P/E of 15.80 and forward P/E of 12.30, which makes the stock cheap that has a lot of room to grow in the future. It has profit and operating profit margins of 11.92% and 11.83% respectively for the last twelve months. In addition, the company has $2.40 billion in cash and no debt. Therefore, the investors can certainly invest in the stock as it offers strong growth potential in the long-run.
