Mobley's re-rating followed relatively in-line 1Q23 results & a weak 2Q23 guide for AMBA, an outlook that considers the ripple effect of COVID lockdowns in China. He expected these issues to be transitory and suggested investors buy shares of AMBA on any resulting weakness.
To adjust for lower peer group multiples and lower near-term estimates, Mobley cut the price target.
Mobley saw investors care the most about AMBA seeing disruption related to China COVID-19 mitigation efforts & related supply issues. China accounts for only 15% of AMBA's end-market consumption, but most customers have manufacturing operations in China.
Needham analyst Quinn Bolton maintained Ambarella with a Buy and lowered the price target from $175 to $120. AMBA's 1Q23 results were in-line or better than guidance, but China lockdown headwinds and customers delaying orders due to kitting issues were the main focus of the earnings call.
Bolton believes this is the peak of China/supply headwinds. The analyst remained firm in believing that AMBA is ready for sustained growth driven by new CV product cycles.
Keybanc analyst John Vinh maintained Ambarella with an Overweight and lowered the price target from $160 to $120. AMBA reported in-line 1Q results and guided 2Q lower primarily due to the China COVID lockdowns, exacerbating kitting issues and negatively impacting AMBA's customer supply chain.
F2Q headwinds from Samsung Electronics Co, Ltd SSNLF wafer shortages at 14nm remain unchanged at ~$5 million, with supply likely to improve Q/Q in both 3Q and 4Q.
Fundamental demand for CV remains strong, reaching 40% in the quarter, and remains on track to represent 45% of FY23 revenues. Vinh lowered estimates and price target to $120 primarily to reflect peer multiple contractions.
Rosenblatt analyst Kevin Cassidy maintained Ambarella with a Buy and lowered the price target from $200 to $125. China shutdowns, IC kitting shortages, and foundry shortages have Ambarella management guiding for an 11% sequential revenue decline during the July quarter.
Expectations are for sequential growth in 2HF23 from this lower base. The management's strategy remains solid, as per Cassidy.
Ambarella's CVflow architecture redefines inference artificial intelligence at the network edge from a price/performance/power point of view. Cassidy continues to be impressed with the company's pipeline of brand-name design wins.
The analyst saw the lower than expected July quarter guide as a reset the market anticipated. While Cassidy reduced estimates, he believes that the new forecast may be conservative with fewer China lockdowns and gradual improvement in semiconductor supply.
Price Action: AMBA shares traded lower by 2.89% at $82.76 on the last check Wednesday.
Photo via Wikimedia Commons
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.
All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.
Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.
Rate collection and criteria: Click here for more information on rate collection and criteria.