Ambarella today
(As of 12/02/2024 ET)
- 52 week range
- $39.69
▼
$81.32
- Target price
- $81.67
It took time for Ambarella NASDAQ: AMBA to gain momentum, but the third quarter results prove it. The transition from a purely computer vision company to an edge AI company focused on computer vision plays an important role in the company’s development and provides a vehicle for growth in the long-term future. The third quarter results are specific to the company due to its leadership position in computer vision and artificial intelligence technologies, and are also supported by overall growth in demand in the industrial chip market. Results Analog devices NASDAQ: ADI, Supermicro Computer NASDAQ: SMCIGlobalFoundries and others report that the global inventory correction is ending and demand is improving in all end markets, including the automotive and Internet of Things industries, where Amberalla shines.
Ambarella shares rise 20% after report of growth and price increases: higher prices to come
Ambarella shares jumped 20% after the company reported third-quarter results as growth accelerated sequentially to more than 63% year over year, topping consensus estimates by nearly 500 basis points and raising guidance that is likely careful. The company reported net revenue of $82.65 million, driven by growth in the automotive and IoT end markets, demand for edge AI products and next-generation technologies such as the CV5 series. The company noted an increase in new products among end-market OEMs as a driver of demand for the CV5, which is also notable due to profitability. Sales of Edge AI products accounted for 70% of revenue and are viewed by management as driving multi-year growth.
Ambarella stock forecast today
$81.67
Growth potential 16.38%Moderate purchase
Based on ratings from 12 analysts
| High forecast | US$100.00 |
|---|---|
| Average forecast | $81.67 |
| Low forecast | $55.00 |
Ambarella stock forecast details
Margin news is great. The company’s revenue growth provided enough leverage to cut GAAP losses in half and achieve a significant increase in net income. Adjusted earnings were $0.11, offsetting the prior-year loss, and beat MarketBeat’s consensus estimate by $0.07, or 17,500 basis points. The leadership is equally strong. The company expects fourth-quarter revenue to be between $76 million and $80 million, compared with consensus estimates of $69 million, and the outlook is likely to be cautious. Ambarella chips are used in cameras that can recognize people and objects in densely populated areas, have voice and motion control, and enhance images using artificial intelligence, suitable for numerous consumer and industrial applications.
Investors are also pleased with its cash flow and balance sheet. The company posted positive quarterly cash flow, will continue its year-over-year trend of positive cash flow, and plans to improve further next year. Balance sheet highlights include increasing cash and assets offset by liabilities, stable capital and ultra-low leverage, so there is potential for significant value growth in the next year as the cash balance increases. One opportunity is to reintroduce share buybacks to offset stock-based compensation, and another is to make value-enhancing acquisitions to strengthen the advanced AI portfolio. In terms of leverage, total liabilities are around 0.2x equity, giving the company plenty of financial flexibility.
Analysts support Ambarella’s results and significantly raise price targets
Analyst reaction to Ambarella’s results was bullish, with nearly a dozen changes tracked by MarketBeat raising the price target by double digits. The new range puts shares in the $90 to $100 range, which represents 12.5% to 25% upside from the post-release price increase. A move to this level would put this market at a near two-year high and set it up for the completion of the reversal. In this scenario, the share price could rise another 20% towards the $100 level and move higher in the long term. The long-term consensus is that this company will quadruple in size by the end of the decade, and forecasts are cautious.
The technical outlook is good. The stock has a hurdle at $85, but should be able to clear it now. Analysts began raising their targets again, and institutions bought AMBA in 2024. Institutional activity will be upbeat for three quarters of 2024, including the fourth quarter. At the same time, the stock price can rise above $100 without the help of analysts.
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