UPDATE: Wells Fargo Starts Ambarella (AMBA) at Equal Weight Preferring ALGM
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Wells Fargo initiates coverage on Ambarella (NASDAQ: AMBA) with a Equal Weight rating and a price target of $110.00. Following $1.0B in total R&D investment since the company's inception, with nearly half of this focused on the development of the company's computer vision (CV) family of processors, the company is leading the revolution in adding AI/ML functionality to end markets such as autonomous vehicles, in-cabin automotive driver monitoring and security cameras.
The analyst stated "Our neutral-stance rating of EW is based in part on our belief AMBA is well positioned to benefit from mega trends such as machine vision at the edge (enabled by AI/ML); however, our enthusiasm is tempered by a lofty company valuation." "With shares trading at ~145.0x NTM EPS estimates, and with shares outperforming the SOX by ~35ppts over the past year, we believe several potential upside scenarios have already been priced into shares. Based on relatively better valuation, a higher mix of revenue tied specifically to new motor vehicle production and much more customer diversity, we view Allegro MicroSystems, Inc. (NASDAQ: ALGM), as a better small-cap way to play technology trends in the automotive market as well as the general upturn in motor vehicle production we are expecting."
Shares of Ambarella closed at $106.25 yesterday.
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