Ambarella (NASDAQ:AMBA), a company that focuses on video chips and similar components, posted its earnings report yesterday just after trading closed. The company popped up 4.9% in premarket trading, and held onto those gains briefly going into this morning's trading session, after beating expectations for earnings and revenue alike. With financial analysts deeply bullish, and having been so for the last two years, Ambarella looks to produce a solid investment proposition.
Ambarella Earnings Report Produces By-the-Numbers Win
Ambarella's earnings report delivered a solid win, bringing out earnings of $0.23 per share against analyst consensus expectations of $0.17. The win was even more solid against figures from this time last year, as the latest numbers represented an increase of 475% against last year's figures, reports noted.
Revenue likewise presented a win, if not so pronounced; the company posted revenue for the quarter of $70.133 million, which was still enough for a win over the analyst consensus of $68.61 million. Reports from the company's president and CEO, Dr. Fermi Wang, noted that revenue is up 28% against last year's figures, which is another solid win.
The company also posted guidance that surpassed expectations; while estimates look for Ambarella's second quarter to come in at $69.46 million in sales, Ambarella is looking for revenue between $74 million and $76 million.
Fermi Wang also noted that the new product cycle is constraining, rather than exaggerating, results for Ambarella products; while Wang points to issues of the supply chain still having considerable effects on operations, Wang also notes that the company's “...execution is strong.” Wang also suggests that the current guidance assumes that the worst of the supply chain issues stemming from the Texas freeze event will ultimately be filled in the second quarter, and will improve throughout 2021's second half. The effects from supply chain issues may be constraining results, but the results presented are still substantial; Wang revealed that the company has already shipped over 450,000 system-on-a-chip (SoCs) into the automobile market, and looks to see automotive business effectively double over the course of 2021.
What Are Financial Analysts Saying About AMBA Stock?
The word from financial analysts, as far as Ambarella stock goes, is positive. Overwhelmingly so, in fact, and over the long term as well. Ambarella stock has been rated a consensus “buy” for the last two years now, and sentiment has grown increasingly bullish over the last year.
A year ago, the company stood at eight “buy” ratings, three “hold” and one “sell”. Six months ago, that shifted to 10 “buy”, four “hold” and one “sell” rating. Currently, we stand at 11 “buy”, three “hold” and one “sell,” demonstrating increasing “buy” interest and stable “hold” and “sell” interest from financial analysts.
The Ambarella price target, meanwhile, occupies a surprisingly broad range. The current average price target is $105.75, with a high of $150 and a low of $50 surrounding the average. With Ambarella stock currently selling at $99.46 per share as of this writing, there is still clear upside potential left on this stock.
Recent movement has been generally positive. Both Rosenblatt Securities and Stifel Nicolaus upgraded their price targets on Ambarella today, with Rosenblatt going from $140 to $145 and Stifel Nicolaus going from $135 to $140. Oppenheimer also came out with a point today, reiterating its “hold” rating on the company. Before those three kicked in, the last change seen was back in late March, when Wells Fargo initiated coverage on the company with an “equal weight” rating and a $110 price target. March proved to be an excellent month for analyst sentiment, as that month brought four analysts boosting their price targets on the company.
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