Stifel Reiterates Buy on Ambarella (AMBA) Ahead of 2Q Report
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Stifel reiterated a Buy rating and $86.00 price target on Ambarella (NASDAQ: AMBA) ahead of the company's 2Q earnings report. Stifel is expecting AMBA to report revenue of $63mn, up ~10.2% q/q, at the midpoint of management’s guidance and slightly below the Street estimate of $64mn, and non-GAAP EPS of $0.35, below the consensus estimate of $0.38.
Analyst Kevin Cassidy commented, "Ambarella management's 2QFY17 revenue guidance included some caution around the availability of SONY CMOS sensors used in high end surveillance cameras. Recent checks indicate that SONY was able to meet end market demand. This has us cautiously optimistic that Ambarella shipped to unconstrained demand and may beat our and consensus revenue estimates. We are expecting 3QFY17 revenue guidance to show a return to y/y growth as GoPro's initial Hero 5 builds provides ~$18mn of revenue compared with roughly zero revenue in the past 3 quarters as the older Hero 4 inventory was worked lower. More importantly for our recommending the AMBA shares, Ambarella's many other markets remain in high growth mode. We see consumer home security market as the near term catalyst and the automotive market as the longer term catalyst. Following the GoPro inventory correction, we are estimating +33% revenue and +44% earnings growth y/y for Ambarella in FY18 with GoPro only representing 10% of total revenue."
Shares of Ambarella closed at $67.86 yesterday.
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