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Ambarella Drops 3% In Pre-Market On Dim 3Q Sales Outlook

Shares of Ambarella are trading down 3.4% in Thursday’s pre-market session after the video and image processing chipmaker provided a lower-than-expected revenue outlook for 3Q. The company forecasts revenues between $52 million and $56 million, while analysts are projecting sales of $56.4 million.

Nonetheless, Ambarella (AMBA) reported better-than-expected 2Q results. The company’s revenues of $50.1 million marginally exceeded analysts’ expectations of $50 million. Its adjusted EPS of $0.06 also compared favorably with the Street consensus of a loss of $0.02 per share. Overall, both earnings and revenues plunged 72.7% and 11.2%, respectively, on a year-to-date basis.

“We are encouraged by the growing acceptance of our visual AI [Artificial Intelligence] products, despite the economic consequences of the pandemic and the continuation of the geopolitical risks,” Ambarella CEO Fermi Wang said. “We remain confident 10% of our total revenue will be earned from CV [computer vision] products in fiscal year 2021,” he further added. (See AMBA stock analysis on TipRanks).

Last month, Rosenblatt Securities analyst Kevin Cassidy reiterated a Buy rating on the stock with a price target of $60 (7.3% upside potential). In a note to investors, Cassidy wrote, “We are more constructive on Ambarella’s return to growth as the world economies recover. We believe the company’s product line-up is well positioned for the growing demand for processing and analyzing video.”

Currently, the Street has a bullish outlook on the stock, with a Strong Buy analyst consensus. The average price target of $55.75 implies that shares are almost fully priced at current levels. Shares are down nearly 7.7% year-to-date.

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Amit Singh
Amit Singh jumped into the world of stock analysis and investing after completing his Post Graduate Diploma in Finance in 2009. Before joining TipRanks in 2020, he worked as an equity research analyst for eight years. With a keen eye for identifying strategic investment opportunities, his work entails evaluating stocks, building financial models, writing company-specific research reports, and identifying the overall financial worth of companies in the consumer staples and technology sectors. In 2017, Amit found a way to combine his expertise in evaluating companies with his passion for writing. He has also worked with the financial research firm Market Realist.

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