NEW YORK (TheStreet) - Ambarella's stock soared yesterday after some successful demos at the 2015 Consumer Electronics Show. The camera-chip-maker showed off its H1 camera System-On-Chip, which will be useful for sports and quadcopter cameras, the cameras you see on drones. It also introduced the A12W Reference Design Kit, which could be particularly useful for wearable cameras that are increasingly in demand for the police force. Must Read: Cramer's Outlook for the Dow 30 Stocks, Part 3: Caterpillar to McDonald's At market close, the shares had risen 13.46% to $60, but shares were giving back some gains in Thursday trading, falling 1.9% to $58.84. Here's what analysts said about Ambarella: Brad Erickson, Pacific Crest (Buy, $70 PT) "We met with CFO George LaPlante earlier today at CES. We came away incrementally more confident in our near-term upside bias to estimates and continue to believe we could be in front of a series of more beats and raises. We continue to think the market is overly concerned by slowing growth in 2H and pricing pressure from its largest customer GoPro. We found Mr. LaPlante's remarks around IP security growth as incrementally more positive, driven by strength out of China. While the details of which company Ambarella might be taking share from were sparse, given the magnitude of the upside to the company's January-quarter guidance, we believe that Ambarella may be taking some share from its largest competitor in China, Hisilicon, which could serve to temper investor fears around potential pricing pressure. Further, for those security camera vendors selling to customers outside of China, we continue to believe Ambarella remains the most compelling option as many would-be buyers have concerns around purchasing a security-based product from a Huawei-owned entity. Mr. LaPlante reiterated that, in addition to drones and consumer IP security, the company assumes only modest contribution from wearable cameras into verticals like law enforcement going forward. With Ambarella having just sold a reference design to an ODM, unit volumes from this segment could grow by orders of magnitude as early as this calendar year, in our view." Must Read: GoPro Stumbles After CFO Mentions Global Expansion: What Wall Street's Saying Matt Ramsay, Canaccord Genuity (Buy, $66 PT) "We believe Ambarella's portfolio of highly-differentiated application-specific video encoding microprocessors positions the company for strong sales and earnings growth as HD and UltraHD video capture and compression become increasingly important across several growing consumer and enterprise markets. Further, we believe Ambarella's investments in video analytics will prove significantly undervalued and provide sustained long-term differentiation and pricing stability. We believe Ambarella's lineup of application-specific video encoding processors are differentiated in terms of both video compression and processing power efficiency. We believe leadership in both of these vectors is sustainable and will allow Ambarella to maintain its leading market share position in high-definition video encoding processors across a variety of growing end markets as the SD-to-HD-to-UltraHD transition accelerates. Long term, we believe Ambarella's investments in video analytics software and encoding expertise will drive significant value and differentiation as pre-pended video compression analytics hints and camera-side analytics become increasingly important for real-time and cloud-based video analysis. Important applications include facial and action recognition, security, augmented reality, self-driving autos, and content-aware advertising. In fact, we believe the realized value of both client- and server-side video analytics is at the tip of the iceberg, and Ambarella's investments in this area will eventually prove its most valuable." Must Read: Why Fitbit CEO James Park Thinks His Company Was the Pioneer In the Expanding Wearables Market TheStreet Ratings team rates AMBARELLA INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation: "We rate AMBARELLA INC (AMBA) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value." Highlights from the analysis by TheStreet Ratings Team goes as follows: The revenue growth came in higher than the industry average of 18.6%. Since the same quarter one year prior, revenues rose by 42.8%. Growth in the company's revenue appears to have helped boost the earnings per share. AMBA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.34, which clearly demonstrates the ability to cover short-term cash needs. AMBARELLA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, AMBARELLA INC increased its bottom line by earning $0.85 versus $0.39 in the prior year. This year, the market expects an improvement in earnings ($1.79 versus $0.85). The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 100.8% when compared to the same quarter one year prior, rising from $9.13 million to $18.33 million. Net operating cash flow has significantly increased by 142.54% to $16.95 million when compared to the same quarter last year. In addition, AMBARELLA INC has also vastly surpassed the industry average cash flow growth rate of 11.80%. You can view the full analysis from the report here: AMBA Ratings Report
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