Canaccord Genuity Remains Bullish on Beaten Down Ambarella (AMBA)

Ambarella (NASDAQ: AMBA) shares have sharply traded down the last couple months as well-placed fears over key customer GoPro's camera sales have weighed on both stocks. Canaccord Genuity believes there may be risk to near-term numbers given the magnitude of the recent GoPro guidance miss but business trends remain strong, outside of that customer and long-term technology differentiation remains intact.

Last week Cannacord hosted an investor meeting with co-founder, chief architect, and CTO Les Kohn and now has a more acute appreciation for the strength and experience of Ambarella's engineering teams, product differentiation along 3 different technical vectors, and secular growth in several addressable markets where Ambarella's video processors remain differentiated.

The competition is increasing but Mr. Kohn does not believe SoC solutions from Qualcomm and others will be competitive with Ambarella application-specific solutions in terms of compression efficiency and power at the same video quality. Ambarella solutions performing roughly 3x better memory bandwidth (translates into both power and cost savings) and 3x lower power for H.264 compression. This information makes the analyst to believe that leads are sustainable at H.265 compression for 4Kp60 video capture.

The analyst reiterated his BUY and $100 PT.

For an analyst ratings summary and ratings history on Ambarella click here. For more ratings news on Ambarella click here.

Shares of Ambarella closed at $50.35 yesterday.

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