Ambarella price target lowered to $80 from $95 at Craig-Hallum

Craig-Hallum analyst Richard Shannon lowered the firm’s price target on Ambarella to $80 from $95 and keeps a Buy rating on the shares. The firm notes that the company’s Q3 guide portends continued inventory burn, but at a magnitude that is somewhat surprising. However, it believes the inventory issue is largely due to lower video chip sales in the IoT space, and sees this as low-value business that should garner a relatively smaller multiple. Ambarella is implementing some cost controls, and is focused incrementally more on other areas, which means leaving legacy parts of their business to suffer. The long-term investor should support these moves, Craig-Hallum says, but the stock price will suffer greatly this morning, providing an opportunity for a lower entry point into the stock.