Ambarella Inc: Zacks’ Bull of the Day

Ambarella Inc. (AMBASnapshot Report) is at the forefront of HD video compression and image processing.  Further, major companies like GoPro, Comcast, and Corning International utilize AMBA’s semiconductors in their video products, including sports cameras, home security cameras, premium navigators, and even drones.  Also, AMBA, has beaten the Zacks Consensus Earnings and Revenue Estimates for the past seven consecutive quarters.  Due to the combination of these positive factors, Ambarella has become the Zacks Bull of the Day.

This Zacks Ranked #1 (Strong Buy) company develops video compression and image processing semiconductors.  The Company’s products are used in digital still cameras, digital camcorders, and video-enabled mobile phones.  Their 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.  Ambarella sells its solutions to original design manufacturers and original equipment manufacturers.  Its technology is also used in television broadcasting infrastructure systems.

In their most recent quarter, Ambarella saw revenues increase 73.5% y/y.  Management credited strong performances in their sports cameras, existing IP security, drones, automotive, and home monitors; essentially every camera segment.  Further, management saw gross margins of 64.8% due to new high margin products.  According to Fermi Wang, president and CEO, “In addition to continued growth from our existing wearable, IP security and automotive video recorder camera markets, we see increased activity across a wide range of home monitoring cameras including models by U.S. service providers, as well as from quadcopters or flying cameras.  We look forward to continued success, as we enable the next generation of intelligent HD and Ultra HD cameras.”

Increasing Estimates

The graph below shows AMBA’s Price and Consensus estimates.  As you can see, the consensus price estimate has risen over the past three consecutive years.

Over the past 30 days, estimates for Q2 16, Q3 16, FY 16, and FY 17 have all increased; Q2 16 jumped up from $0.44 to $0.75, Q3 16 rose from $0.46 to $0.80, FY 16 leaped up from $1.70 to $2.67, and FY 17 increased from $2.25 to $3.19.

Bottom Line

Ambarella has been destroying the Zacks Estimates for over a year and a half now, and continued innovation and expansion have this company on a growth trajectory for the next year plus.  As the usage of home security cameras, drones, and wearable technology increases, Ambarella will be there leading the way with new designs and applications.

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