We're Locking In a Triple-Digit Gain for This Deeply-Overbought Name
We will remain owners of the shares to capture further AI adoption and the impact on its other businesses.
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| Symbol | Transaction Type | # Shares Traded | Recent Price $ | Shares Owned After Trade | % Portfolio |
|---|---|---|---|---|---|
MRVL | Sell | 262 | $117 | 1,898 | 4.25% |
After you receive this alert, we will:
- Sell 262 Marvell MRVL shares at or near $117. Following the trade, the Portfolio will own 1,898 MRVL shares, roughly 4.25% of the Portfolio.
On Tuesday night, Marvell delivered a beat-and-raise quarterly earnings report that has prompted a fresh round of price target increases across Wall Street, including our own. The resulting post-earnings pop in the shares has swelled MRVL’s position size in the Portfolio to more than 4.8% of its assets and that, along with the now deeply-overbought status in the shares, is leading us to take prudent action with the Portfolio’s position. This move will lock in a gain of roughly 150% against the Portfolio’s average MRVL cost basis of $46.87. As we lift our price target to $130 from $105, we will also downgrade MRVL shares to a Two rating from One.
After the trade, the Portfolio will continue to hold a significant position in MRVL shares. The logic behind that is that we are still in the early stages of AI adoption and the rollout of Marvell’s proprietary chips with Amazon AMZN, Meta META, Microsoft MSFT and Alphabet GOOGL. The ramp in those efforts should bring incremental margin leverage while overall AI adoption drives a demand rebound for Marvell’s Enterprise Networking and Carrier Infrastructure businesses. During the company’s October quarter, the collective revenue from those two segments rose 4% sequentially and management sees that pace of recovery accelerating in the current quarter with aggregate revenue expected to climb mid-teens on a quarter-over-quarter basis.
As the rebound in those two segments unfolds and we have more clarity on the ramp in Marvell’s third-party AI chip business, we aim to revisit our MRVL price target.
The next known catalyst for MRLV shares will be the November revenue report from Taiwan Semiconductor TSM which should be out late this week or early next. That report will also be a catalyst for our shares of Nvidia NVDA, Apple AAPL and Qualcomm QCOM. Based on what we learn, we will revisit price targets for those shares as needed.
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(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to click on Closed Trade Gain/Loss and toggle the chart to sort by Purchase Date.)
At the time of publication, TheStreet Pro Portfolio was long MRVL, AMZN, META, MSFT, GOOGL, NVDA, AAPL and QCOM.
