Ambarella Declines 17% Despite Better-Than-Expected Q4 Results

Shares of semiconductor design company Ambarella (AMBA) tanked 17% in Monday’s extended trading session despite better-than-expected results for the fourth quarter of Fiscal Year 2022 (ended January 31, 2022).

Revenues rose 45% year-over-year to $90.23 million and marginally surpassed analysts’ expectations of $90.16 million. Meanwhile, adjusted earnings of $0.45 per share also beat the consensus estimate of $0.42 per share. The figure compares favorably with the earnings of $0.14 per share reported in the same quarter last year.

While research and development expenses rose 30.5% year-over-year to $48.5 million, selling, general and administrative costs increased 44.3% to $21.1 million.

The President and CEO of Ambarella, Fermi Wang, said, “We continue to face headwinds, including geopolitical, public health, and persistent supply chain challenges. Nevertheless, we believe we are now decisively established in front of the positive AIoT secular trends and our commitment and execution are expected to drive CV to be 45% of total revenue in fiscal 2023.”

Guidance

For the fiscal first quarter, Ambarella expects to generate revenues in the range of $88.5 million to $91.5 million. Gross margin on an adjusted basis is expected between 63% and 64%. Further, adjusted operating expenses are expected to range from $41 million to $43 million.

Stock Rating

Following the release, Rosenblatt Securities analyst Kevin Cassidy maintained a Buy rating on the stock and lowered the price target to $200 from $250. The new price target implies 43.2% upside potential from current levels.

Cassidy said, “Multiple supply chain issues that are plaguing the industry restricted any revenue upside. Further, fab partner, Samsung, will miss deliveries on $5 million of 14nm video processor die in the July quarter. While these disruptions are slowing growth in the near-term, we see an increasing demand for Ambarella’s AI/computer vision processors in automotive, security, manufacturing and retail applications that can accelerate growth longer-term.”

The stock has a Strong Buy consensus rating based on 10 Buys, 1 Hold and 1 Sell. The average Ambarella price target of $210.75 implies 50.9% upside potential from current levels. Shares have gained 17.6% over the past year.

Blogger Opinion

TipRanks data shows that financial blogger opinions are 100% Bullish on AMBA, compared to a sector average of 68%.

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