Ambarella (AMBA) Shares Gain 16% After Topping Q3 and Guidance Views, Analysts Positive on Auto Industry Sales Acceleration

December 1, 2021 7:47 AM EST
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Price: $155.82 --0%

Rating Summary:
    15 Buy, 6 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 18 | Down: 10 | New: 16
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Shares of Ambarella (NASDAQ: AMBA) are up nearly 17% in pre-open after the company reported better-than-expected Q3 results.

Ambarella reported Q3 EPS of $0.57 to top the analyst estimate of $0.49. Revenue for the quarter came in at $92.2 million versus the consensus estimate of $90.35 million.

For this quarter, revenues are seen between $88.5 million and $91.5 million, again higher than the consensus of $88.22 million.

“I’m pleased with our progress in Q3, with positive operating leverage driving non-GAAP operating margins into the 20% range. Our operational execution remains strong, yet supply dynamics remain difficult to predict, as shortages of other companies’ components has become a more significant and gating factor to our results and outlook,” said Fermi Wang, President and CEO of Ambarella.

Needham & Company analyst N. Quinn Bolton reiterated a Buy rating and raised the price target to $225.00 per share from the prior $220.00.

“AMBA experienced a recovery in supply from Samsung's Texas fab, but shortages of other key components became a challenge in the quarter and will persist into C4Q22. On the call, AMBA announced its automotive pipeline has ~tripled to $1.8bn from $600MM over the past year (excluding radar). We expect to receive more color on this at AMBA's Capital Markets Day (Jan 4). Additionally, AMBA highlighted that Rivian's R1T truck utilizes multiple CV2AQ SoCs for AI vision processing and AMBA's CV22AQ SoC for the truck's surround view cameras/Gear Guard security system. Management mentioned that CV5 has been sampled across multiple end markets and expects production in C2H22,” Bolton said in a note.

Oppenheimer analyst Martin Yang maintained a Perform rating on AMBA shares.

“The company continues to accelerate engagement with the auto industry—its long-term revenue funnel in auto has tripled to over $1.8B from a year ago, according to management. The expansion is largely driven by AMBA's more proactive sales engagement as well as its SoC's potential to meaningfully participate in sensor fusion and domain control applications, in addition to perception processing. AMBA's exposure to lower margin sales from Dahua and Hikvision will continue to decline into F4Q22, providing margin lift. Near term, supply crunch its end customers are facing keeps management cautious for the coming six months,” Yang wrote in his report.

Ambarella shares closed at $179.52 yesterday and are up 96.5% YTD.

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