Craig-Hallum analyst Christian Schwab this morning downgrad both LSI (LSI) and Marvell (MRVL) to Accumulate from Buy. He trims his price targets to $6.75 from $8.50 for LSI, and to $22, from $24, for MRVL.
“We believe additional stock price appreciation from current levels will be drive more by positive earnings revisions rather than P/E multiple expansion,” he writes in a research note, adding that “it will be difficult for Marvell and LSI to meaningfully exceed Street expectations in the near term.” He notes that both companies have improved gross margins materially over the last year; and he notes that they are heading into the seasonally slowest part of the year.
Schwab points out that both companies have heavy exposure to the disk-drive industry, accounting for about half of Marvell’s revenues, and about quarter of revenues for LSI. “Until we have further evidence on the strength of a PC replacement cycle as well as continued improvement in enterprise spending, we do not see meaningful upside potential to the stocks,” he writes.
In today’s trading:
- LSI is down 8 cents, to $6.25.
- MRVL is down 22 cents, to $20.55.
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