Should You Stay On The Sidelines While Ambarella Goes Through Its Growing Pains?

After Ambarella Inc. AMBA reported better-than-expected earnings Tuesday, Oppenheimer analyst Andrew Uerkwitz maintained his Perform rating.

“Our neutral stance on AMBA remains unchanged. We expect the stock to perform sideways until the company announces more details on the commercial outlook of its computer vision products,” said Uerkwitz.

Highlights From The Report

• Revenue: Up 12 percent year-over-year
• Net Operating Margin: Down 3 percent year-over-year
• Management's outlook for drones is more negative
• IP Camera and wearable camera (except GoPro) are exceeding expectations
• Ambarella expects its Computer Vision Chip to be sampled in the second half of 2017. Management also highlighted that it plans to release 2-3 Computer Vision products every year.

Overall Outlook

Uerkwitz concluded, “Our thesis on AMBA is unchanged. We remain on the sideline while the company sorts through near-term growth issues with key customers (GoPro and DJI). We look forward to catalysts in C2H17, when management provides more details on the commercial outlook and customer profiles of its computer vision products.”

Check Uerkwitz's traack record here.

Ambarella was trading down over 11 percent Wednesday at $53.22.

See Also:

Ambarella Doesn't Believe GoPro's 'Competitive Solution' Changes The Competitive Landscape

Ambarella Lower After Q4 Beat Trumped By Lower Guidance