Nvidia Inc. (NVDA) recent investment of 2 billion dollars in Marvell Technology (MRVL) and management’s recent earnings guidance have driven MRVL stock higher. This has led to a huge and unusual trading of in-the-money MRVL puts. These are all bullish signs for investors in MRVL stock.
MRVL rose today in mid-day trading $108.86. That’s an increase from the low price of $87.82 on March 30. You could have a lot further to go, as this article will show.
This was just before Nvidia’s March 31 announcement of a $2 billion investment in Marvell Technology to advance the two companies’ AI collaboration.
Additionally, management recently raised its revenue projections in its March 5 earnings results. They now project that revenue could reach nearly $15 billion by next year (fiscal year ends January 31, 2028).
As a result, analysts are now projecting $14.78 billion in revenue for fiscal 2028. I discussed their free cash flow (FCF) projections in a recent Barchart article (March 11, “Marvell Technology’s Strong Outlook Sparks Huge Unusual Options Trades.”)
I showed how MRVL shares could be worth $167.53 per share, based on a forecast of $2.57 billion FCF over the next 12 months (i.e. 20% FCF margin x $12.86 billion revenue forecast for the next 12 months).
Using an FCF return metric of 1.76%, Marvell’s stock value could rise to $146 billion (i.e. $2.572 billion/0.0176). That’s still 22% higher than its current market value of $95 billion.
So, using today’s price, a new price target is:
$108.86 x 1.22 = $132.81 target price – next 12 months (NTM)
However, using management’s guidance for fiscal 2028 revenue and analyst forecasts ($14.78 billion), FCF could rise to nearly $3 billion using a 20% FCF margin. As a result, MRVL could be worth $167.7 billion (i.e. $2.952 billion/0.0176), or +76.6% more:
$108.86 x 1.766 = $192.25 target price (fiscal year 2028)
So on average our target price is $162.53 over the next year or so. That could be the reason why the MRCL is increasing.
Additionally, analysts have been raising their price targets. For example, Yahoo! The PT Finance Analyst Survey is now $121.25, up from $120.28, as seen in my March 11 Barchart article.
