Bank of America Cuts Marvell to Neutral, Lowers Target After Lumentum Deal

According to CNBC, Bank of America downgraded Marvell Technology to neutral from buy and cut its price target to $225 from $400 after Marvell agreed to acquire Lumentum Holdings in a deal valued at more than $100 billion. The new target implies 31% upside from Monday’s close. Marvell shares fell 13% on Monday after the deal announcement. Analyst Vivek Arya said the transaction could weigh on the stock because of a potentially extended regulatory process, including in China, limited earnings-per-share accretion relative to expected share-count dilution, and possible customer and channel conflicts. He also cited a recent contraction in semiconductor-sector valuations; the Philadelphia Semiconductor Index fell about 19% over the past month.