Following the release of the earnings report, Ambarella released guidance for the fiscal third quarter and investors did not respond well. The company expects revenue for the third quarter to be in the range of $90 million to $93 million, compared to the consensus estimate of $92.33 million.
On the books, the company had cash, equivalents and marketable securities totaling $239.8 million at the end of the second quarter, compared to $209.0 million at the end of the previous fiscal year.
Canaccord Genuity issued a call on Ambarella in which its analyst Matthew Ramsay lowered his price target to $105 from $122 and maintained a Buy rating. The firm detailed in its report on Ambarella:
Ambarella reported strong JulyQ results with revenue (+79% year over year), margins, and EPS above consensus, driven by strong camera processor sales across several end markets, particularly sports cameras and drones. However, for the first time in recent memory, guidance was slightly below consensus as launches of key new sports cameras were earlier in the year rather than in the fall ahead of the holiday season. Given the current market environment, shares could react sharply downward in near-term trading to the first “disappointing” news from a company that has executed so well. However, we maintain our belief Ambarella’s portfolio of highly differentiated application-specific video encode, compression, and analytics processors will maintain strong market share against SoC competition and positions the company for strong sales and earnings growth as HD and UltraHD video capture and compression become increasingly important across several consumer and enterprise markets including action, wearable, automotive, security, and drone cameras. Given the third quarter guidance, our estimates come down as does our price target from $122 to $105. Reiterate BUY.
Ambarella has sold off by about 20.8% within the past month. The bulls might see this as a flush out and a potential buying opportunity for this stock. However, it is worth keeping in mind that this stock has run over 150% since this time last year, and more bearish investors could see the stock giving more back.
Shares of Ambarella closed Tuesday down 6.3%, at $89.61 in its 52-week trading range of $33.35 to $129.19. Shares were down 11% at $79.74 in Wednesday’s early trading indications. The stock has a consensus analyst price target of $105.45.
Separately, GoPro Inc. (NASDAQ: GPRO) felt the pain from Ambarella’s earnings. GoPro shares closed Tuesday down 6.2%, at $43.69 in its 52-week trading range of $37.13 to $98.47. In early trading indications on Wednesday, shares were down 5.9% at $41.10. The stock has a consensus analyst price target of $76.50.
Top Gaining Stocks
Top Losing Stocks