Parkev Tatevosian, CFA on $MRVL (Nov 10, 2026)
MRVL fell nearly two-thirds from $330 to $136 after a $110 billion all-stock Lumentum deal and AI selloff; concerns include dilution and the shift from asset-light to manufacturing, while $4 billion cash vs $5.4 billion debt limits cash financing. The speaker reaffirmed buy and raised confidence/conviction from low to medium: analyst EPS growth estimates rose from 15% since 2024 to 56%, the deal should add to EPS in year one with nearly $1 billion synergies, forward P/E 18.7 is less than a third of projected EPS growth and down from over 40 earlier this year, and DCF fair value is $252 vs $137, so MRVL looks undervalued.
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Marvel's stock price is experiencing a sharp decline, and the situation worsened after the company announced the acquisition of Lumentum, followed by massive sell-offs of artificial intelligence stocks on Thursday.
Overall, Marvel stock is trading at $136 per share, down nearly two-thirds from its 52-week high of $330 per share. The proposed acquisition, valued at over $110 billion, is roughly equivalent to Marvel's entire market capitalization of $120 billion .
Investors are concerned about the price , the fact that Marvel will be offering all shares for Lumentum, which will dilute shareholders' stakes, and the fact that Marvel has historically operated on an asset-light business model with no manufacturing and reliance on outsourcing.
With the acquisition of Lumentum, the company gained physical assets, such as manufacturing facilities, which Marvel deemed very important for the company to acquire.
Therefore, all of this has left Marvel stock investors disappointed and frustrated as the valuation collapses. So, one of the things that is encouraging about Marvel is that Wall Street analysts who follow the company are expecting huge increases in earnings per share over the next few years .
In fact, these estimates have increased since 2024 when Wall Street analysts were predicting 15% earnings per share growth over the next few years. That has nearly doubled to reach 56% earnings per share growth over the next few years .
Marvel told investors during a meeting to describe the acquisition that in the first year after the acquisition is completed, it will add to the company's earnings per share. The company highlighted nearly $1 billion in annual synergies resulting from the acquisition to the post-acquisition period.
The size of the acquisition is a cause for concern, isn't it? The announcement was of an institutional value exceeding $110 billion . As for the company, it stated that Marvell's market value barely reached $120 billion after the massive sell-off.
If you look at the balance sheet , they don't have enough cash to improve the offer instead of using shares. If they wanted to improve the offer and add more cash, they don't really have that ability.
If you look at the balance sheet , Marvel has only about $4 billion in cash and short-term investments, and about $5.4 billion in debt. Now, they have the ability to borrow for financing , but that's a small percentage of the total value of the deal.
They might be able to borrow $10 billion , or perhaps $20 billion if they really want to push for at least a cash-and-stock financing for the acquisition , but you can see here that the size of the acquisition would be difficult for Marvel to achieve, which is one of the reasons why investors are worried about this deal.
Marvell's valuation has fallen sharply since it peaked at more than 40 times its forward price-to-earnings ratio earlier this year.
If you recall, several months ago I warned investors several times that Marvell stock was overpriced when it was near its peak, trading above $300 per share. Now, however, Marvell is trading at less than half that valuation at a forward price-to-earnings ratio of 18.7.
This is also less than a third of Marvell's projected earnings per share growth rate over the next several years.
Therefore, the valuation today is much more attractive than it was two months ago. Furthermore, I updated my assessment of the company's discounted cash flows , and they appear to be undervalued using this metric as well.
I calculated a fair value of $252 for Marvel stock, while the current market price after the major crash is $137.
Therefore, regardless of the valuation method I use, Marvel stock now appears to be undervalued. Therefore, I upgraded my Marvel stock rating to "buy" on October 28 with a low confidence level and a low conviction level with this rating.
Today, I reaffirmed this buy rating, but I also raised my confidence and conviction level from low to medium.
because remember that one of the reasons Marvel's stock is so high is because Nvidia's CEO, Jensen Huang , said he expects Marvel to become the next trillion-dollar company.
The company has lost a lot of value since its rise, which was fueled by those comments.
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Parkev Tatevosian, CFA has 6 calls on this stock; only the adjacent ones are shown.