Ambarella, Inc. (AMBA) Stock | Positive Third Quarter Fiscal 2016 Financial Results, Weak Guidance


Ambarella, Inc. (NASDAQ: AMBA)


Ambarella, Inc. (AMBA), a semiconductor processing company on Thursday announced their third quarter fiscal 2016 financial results. AMBA posted revenues of $93.2 million which was up 42% from third quarter fiscal 2015. Gross Margin (GAAP) was 65.7% up from 63.3% from third quarter fiscal 2015. Earnings were $0.87 beating analyst estimates of $0.71. The third quarter numbers were impressive, however the guidance numbers for the fourth quarter fell short of expectations. AMBA guided for fourth quarter revenues of $65 to $67.5 million, which did not meet analyst expectations of $76 million. While the gross margin is expected to be in between 63% and 64.5%  down from third quarter of 65.7%.


Ambarella, Inc. CEO Comments

“Our strong third quarter results reflect our success in expanding revenues in new markets such as flying cameras and home security monitoring, as well as existing markets for professional IP security cameras and automotive after-market dash cameras. Although we expect these markets to continue their strong annual growth, we are experiencing near term headwinds in the wearable sports market which is expected to negatively impact revenue in Q4 of this year,” said Fermi Wang, president and CEO of Ambarella. “Despite the near term headwinds, we are very pleased by the wide range of new cameras introduced by customers during the third quarter, and by our introduction of three new SoC families that will drive the next generation of innovative camera products.”  Globe Newswire


AMBA Technical Analysis


AMBA gapped down in price on Friday to $54.50, down from the prior day’s close of $57.88, which is a 6% decrease in price on mixed news. Taking a look at the daily chart, we can see the last time AMBA traded below this price level was on November 18th, when it traded at $53.42. Taking a further look back on the daily chart, we can see that AMBA has been on an overall decline dating back to July 24th when it traded at $124.23. More recently, AMBA has been rebounding off of lows of $50.35 reached on November 13th.  AMBA did post positive third quarter numbers, however their guidance for fourth quarter was lower than expected leading to the gap down in price. I believe the gap down in price was an overreaction to the guidance numbers and this may be a good spot for a little rebound. AMBA does have a float of 28.75 million shares and was trading over 2 times the normal daily trading volume. AMBA did reach pre market highs of $55.66, but gave back $1.16 at the open, or equivalent to 2%. For trading purposes, my entry point would have been $54.60 looking for a run through $55. My stop loss would have been $54.40, fearing anything below that and the stock would continue its move down.


Company Profile

Ambarella, Inc. develops semiconductor processing solutions for video that enable high-definition (HD) video capture, sharing, and display worldwide. The company’s system-on-a-chip designs integrated HD video processing, image processing, audio processing, and system functions onto a single chip for delivering video and image quality, differentiated functionality, and low power consumption. Its solutions enable the creation of video content for wearable sports cameras, automotive aftermarket cameras, professional and consumer Internet Protocol (IP) security cameras, telepresence cameras, and unmanned aerial vehicles in the camera market; and manage IP video traffic, broadcast encoding and transcoding, and IP video delivery applications in the infrastructure market. The company sells its solutions to original design manufacturers and original equipment manufacturers through its direct sales force and logistics providers. Ambarella, Inc. was founded in 2004 and is headquartered in Santa Clara, California.  Yahoo Finance