Rising Expectations For Ambarella; What Experts & Crowd Think

Shares of Ambarella Inc AMBA are on the rise on Monday, in anticipation of the announcement of the company’s first quarter (fiscal 2016) financial results, scheduled for after the market close on Tuesday.

In fact, the stock has been hot since the beginning of the year, having gained more than 83 percent year-to-date. Needless to say, expectations are high. According to Estimize, the Street is modeling consensus earnings of $0.57 per share on revenue of $66.85 million, while the crowd is projecting earnings of $0.62 per share on revenue of $67.71 million.

These estimates imply a growth of, at least, 128 percent from the earnings of $0.25 per share (on revenue of $40.9 million) reported in the same quarter last year.

Moreover, it should be noted from the chart above, that Ambarella has tended to comfortably surpass estimates over the past couple of years. So, a beat this quarter should not be discarded.

The second chart here illustrates the evolution of sentiment over time. Uncommonly, expectations for Ambarella have been rising, as earnings got closer.

An Optimistic View

In a recent report, Pacific Crest analyst Brad Erickson maintained an Overweight rating on Ambarella, while boosting his price target from $78.00 to $96.00, following strong GoPro Inc GPRO checks.

Related Link: Pacific Crest: GoPro Checks Good News For Ambarella

The analyst explained that days of inventory fell month-over-month, and that the firm believes “sales run rates have increased recently, likely driven by incremental bundling with gift cards/memory cards, as well as a strong seasonal rebound associated with dads & grads."

For the current quarter, Pacific Crest models earnings of $0.63 per share, above the Street’s and the crowd’s consensus.

"While we continue to like AMBA longer term on its unique exposure to a host of diversified growth drivers like China action cameras, IP video surveillance, police cameras and drones, the stock's recent run suggests expectations are very high going into next week's print,” the analysts added. “As such, we'd be opportunistic buyers on any pullback in the name."