- Marvell Technology stock has slumped by 50% from its all-time high.
- Most analysts are slashing their MRVL stock target after the Lumentum deal.
- Technicals suggest that the stock may drop to $100 and below.
InvestingCube chart · market data
Marvell Technology stock remains in a deep freefall this month as top analysts lower their targets after the company agreed to acquire Lumentum in one of the biggest deals of the year. MRVL has dropped for five consecutive days, reaching its lowest level since May this year and 50% below its all-time high.
Analysts are Slashing Their Marvell Technology Stock Targets
Most analysts who track Marvell believe that the company has more downside to go in the near term. Bank of America’s Vivek Arya downgraded his rating from buy to neutral, with the target falling from $400 to $225. TD Cowen’s Sean O’Loughlin slashed the rating from buy to hold and the target from $350 to $175.
Cantor Fitzgerald also slashed the target from $350 to $225, while Cantor Fitzgerald lowered the reading from $350 to $225. Other analysts who slashed their targets are from companies like Susquehanna, Royal Bank of Canada, Wells Fargo, Needham, and UBS Group. Still, the consensus target for the stock of $300 is higher than where it is today.
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Analysts have slashed their outlook after the company announced a deal to merge with Lumentum in a deal valuing the latter at $115 billion. Investors believe that the merger is ill-timed as it will lead to more dilution for Marvell’s investors. The deal means that Marvell shareholders will own 67% of the whole company, while Lumentum stockholders will own the rest.
There are also concerns that the deal will ultimately terminate because Lumentum shareholders will vote against the merger. If this happens, Marvell will need to pay substantial sums of money in breakup fees.
Fundamentally, Marvell Technology’s business is doing well, with its revenue growth accelerating. Its last earnings report showed that its revenue jumped to over $2.7 billion from $2 billion in the same period last year. This growth is expected to continue rising, with the upcoming report expected to show that its revenue rose by 52% YoY to over $3.16 billion.
MRVL Stock Price Technical Analysis
Marvell Technologies stock chart | Source: TradingView
The daily chart reveals that Marvell shares have slumped in the past few weeks. It has dropped from a high of $300 in September to the current $163.9. The stock has plunged below the 50-day and 200-day moving averages.
A closer look shows that the Average Directional Index (ADX) has jumped to 23.8, its highest point on October 14. A rising ADX is a sign that the trend is continuing.
Therefore, there is a risk that the stock will have a strong bearish breakout in the near term. If this happens, it may drop to $100, down by 38% from the current level.
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What is your outlook on Marvell Technology?
Anonymous · no sign-up · results from the last 30 days · not investment advice