Marvell Technologies is emerging as a winner to at least one analyst, as the chipmaker could be positioned to capture a good chunk of market share related to the global shift to 5G.
Barclays analyst Blayne Curtis wrote in a note on Wednesday that Marvell is now the bank's top semiconductor pick for 2020.
Curtis has an overweight rating and a $30 price target on the stock, indicating 23% upside from the stock's current level.
"The key point for us is the strength of the 5G opportunity ahead," Curtis said.
Curtis noted he'd spoken with management since the company issued disappointing guidance in late August, and while management's tone hasn't changed much, Curtis thinks a $600 million revenue opportunity for Marvell related to 5G is "conservative" and that it could well be a $1 billion-plus one.
Marvell management had guided for third quarter total revenue of $660 million, plus or minus 3%, disappointing analysts who were looking for $695 million.
Management also guided for adjusted EPS for the quarter of 15 cents to 19 cents, below analyst estimates for 21 cents.
Analysts are now looking for quarterly EPS of 17 cents on $661 million of revenue.
Management blamed broadly worsening semiconductor spend for the poor guidance.
Curtis noted that sales to Samsung are already beginning to see momentum and that sales to Nokia could grow at a faster clip than many currently expect.
For Nokia, there can be "further penetration of the baseband (starts with only some 5G SKUs but opportunity for all)." Curtis also expects strong results from Marvell's recent $650 million acquisition of Avera Semiconductor, which could start to show that strength in the first half of 2020.
Curtis also thinks the storage market could soon begin to firm up.
Storage products comprise the largest portion of Marvell's revenue, as analysts polled by FactSet expect the product segment to account for 43% of 2020 revenue.
Marvell is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio.
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