Ambarella (AMBA) delivered yet another stellar quarterly performance despite chip supply constraints. Its top and bottom lines came well ahead of the Street’s estimates and recorded solid year-over-year growth. (Read more: Ambarella Posts Strong Q2 Results; Shares Rise 6.3%)
While the semiconductor company’s Q2 performance impressed, its upbeat guidance amid demand/supply imbalance further lifted investors’ sentiment.
Ambarella expects to report revenues between $88.0 million to $92.0 million in Q3. This compares favorably with the analysts’ estimate of $78.5 million. Adding to investors’ optimism, Ambarella’s CEO Fermi Wang said, “while the significant industry wide supply-chain challenges persist, we expect F2022 to represent a major inflection in our business, and we are excited about our future.”
Notably, TipRanks’ Stock Investors tool indicates that investors currently have a Very Positive outlook on Ambarella stock, with 1.6% of investors who hold portfolios in TipRanks increasing their exposure over the past month.
Thanks to its strong financial performances and investors’ optimism, Ambarella stock has gained over 150% in one year. Meanwhile, it has grown nearly 44% this year. (See Ambarella stock charts on TipRanks)
Despite supply-chain challenges, Ambarella expects to deliver record revenue in FY22 on the back of its rapidly expanding AIoT (Artificial Intelligence of Things) foundation, new product cycles in existing markets, and expansion into new markets. Therefore I am bullish on Ambarella stock.
In response to Ambarella’s FY22 guidance, Needham analyst Quinn Bolton stated that he expects the company’s FY22 revenue to reach a “new record” high despite supply challenges. The 5-star analyst raised his FY22 and FY23 sales and earnings estimates.
Bolton has a Buy rating on AMBA, with a price target of $140 (6.1% upside potential).
Bolton’s outlook assumes Ambarella’s FY22 auto sales will more than double. Meanwhile, he expects revenues from CV (computer vision) products to account for over 25% of FY22 sales. The analyst sees supply-chain costs to be “higher than normal” in the near term. However, Ambarella’s product mix and stable pricing environment could drive its gross margins higher.
On TipRanks, AMBA commands a Moderate Buy consensus rating, based on 6 Buys and 4 Holds. The average Ambarella price target of $139.44 implies 5.7% upside potential to current levels.
Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.
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