What to Expect From Ambarella Earnings

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Ambarella Inc. (NASDAQ: AMBA) is scheduled to report its fiscal first-quarter financial results after the markets close on Thursday. The consensus estimates from Thomson Reuters call for $0.28 in earnings per share (EPS) on $57.01 million in revenue. In the same period of last year, Ambarella posted EPS of $0.71 and $71.01 million in revenue.

The proliferation of smart devices and ubiquitous access to broadband connections are driving exponential growth in the capture, transmission, consumption and analytics of video content. One key analyst sees Ambarella products as uniquely positioned to enable a new wave of professional and consumer devices to capture and stream high-quality video with real-time analytics. However this is a somewhat neutral view.

Oppenheimer initiated coverage of Ambarella with a Perform rating and no price target. The firm sees Ambarella as one of the best pure-play investments in a future of computer vision and intelligent image-capturing devices. However, it believes the risk-reward profile is balanced for now, considering the unfavorable outlook for major end markets in the near term, timing uncertainty for the market trends that support its future growth and what Oppenheimer sees as a fair valuation.

Ambarella provides the highest-performance video processing systems-on-chips with the lowest power consumption, according to its management. The company’s proprietary video processing architecture and deep domain expertise in video processing and delivery make the company the go-to high-end solution provider in markets such as IP camera, wearable camera, drone camera and automotive dashboard cameras.

This brokerage firm sees intelligent video processing becoming the must-have feature across multiple end markets, a trend from which it believes Ambarella is well positioned to benefit. However, Oppenheimer sees near-term interruptions from the action and IP camera markets, which are 70% of revenues. This prompts a reset of the long-term growth outlook with more conservative assumptions.

A few other analysts weighed in on Ambarella prior to the earnings report:

  • Deutsche Bank reiterated a Hold rating.
  • Canaccord Genuity reiterated a Buy rating.
  • Pacific Crest Reiterated an Overweight rating but lowered its price target to $53 from $62.
  • Morgan Stanley has a Buy rating.
  • Chardan Capital reiterated a Hold rating.

So far in 2016, Ambarella has underperformed the broad markets, with the stock down about 25%. Over the past 52 weeks, the stock is actually down over 50%.

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Shares of Ambarella were trading up 2.5% at $42.58 on Thursday, with a consensus analyst price target of $57.00 and a 52-week trading range of $33.39 to $129.19.