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Wall Street Analysts Weigh In On Ambarella's Q1 Earnings

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Wall Street Analysts Weigh In On Ambarella's Q1 Earnings

Ambarella Inc (NASDAQ: AMBA) stock crashed more than 13 percent Wednesday after the company’s first-quarter earnings report disappointed the market.

Several Wall Street analysts have weighed in on Ambarella stock following the report. Here’s a sampling of what they had to say.

Mixed Numbers

Stifel analyst Kevin Cassidy said first-quarter growth in IP security and automotive segments was offset by declines in sports cameras, drones and wearables.

“Gross margin for the quarter was 61.8% compared to 64.7% F4Q18, with the weakness expected to continue as the company ramps lower margin security cameras combined with the decline of higher-margin drone revenue,” Cassidy said.

Morgan Stanley analyst Joseph Moore said the first quarter was clearly another setback for Ambarella, but he still likes the company’s optionality moving forward.

“While bridging the gap to computer vision revenues starting next year has been harder than expected, we remain bullish,” Moore said.

Uncertain Outlook

Deutsche Bank analyst Ross Seymore said revenue headwinds and lack of clarity on Ambarella’s long-term outline are keeping him away from the stock for now.

“Longer-term, we believe the co’s family of CV enabled chips offer encouraging growth prospects in the co’s core Security Camera and Automotive markets, but the nearer-term headwinds, in addition to political uncertainty, keep us on the sidelines,” Seymore wrote.

KeyBanc analyst John Vinh said the China market and virtual reality have created significant uncertainty for Ambarella.

“In terms of positives, computer vision (CV) in autos appears to be making progress in line with expectations, with customers evaluating engineering silicon and initial benchmarks showing significant performance improvements and advantages over CV1, GPUs, and DSP solutions,” Vinh wrote.

Ratings And Price Targets

  • Deutsche Bank has a Hold rating and $44 target.
  • Morgan Stanley has an Overweight rating and $58 target.
  • Stifel has a Buy rating and $56 target.
  • KeyBanc has a Sector Weight rating.

At time of publication, the stock was trading down 13.5 percent at $42.70.

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Latest Ratings for AMBA

DateFirmActionFromTo
Sep 2020BerenbergInitiates Coverage OnBuy
Sep 2020Craig-HallumUpgradesHoldBuy
Sep 2020NeedhamMaintainsBuy

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