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Shares of Ambarella (NASDAQ:AMBA) are down over 8% in early Wednesday trading after the chipmaker reported Q2 results and offered a lackluster Q3 outlook.
AMBA reported a Q2 EPS of $0.20 to narrowly top the analyst estimate of $0.19. Revenue for the quarter came in at $80.9 million versus the consensus estimate of $80.19 million. The adjusted gross margin was reported at 64.5%, again higher than the 63.4% consensus.
For this quarter, Ambarella is looking for revenue of $81 million to $85 million with the midpoint of this guidance range missing the consensus of $84.7 million.
Summit Insights analysts cut AMBA shares to Hold after earnings. Similarly, a Bank of America analyst reiterated an Underperform rating and a $75 per share price target.
“New CV3/CV5 products could help drive long-term traction, but we remain cautious on 1) elevated opex to support new ramps/design wins (on track to grow ~20% YoY), 2) limited visibility into magnitude/length of emerging OEM inventory corrections, and 3) limited auto concentration today (~25% of sales),” the analyst said in a client note.
A Roth Capital Markets analyst said the soft outlook is a result of lockdown disruptions. Hence, he cut the price target to $110 from $120 but remains Buy-rated.
“We believe AMBA represents a differentiated investment opportunity in computer vision and low power video/radar processors. AMBA reported an inline revenue decline as expected reflecting challenging supply and demand dynamics. We nonetheless believe AMBA CV demand momentum remains healthy and see opportunity for newer CV3 design win announcements in the next few quarters,” he explained in a client note.
