Even the Bears Like AMBA

There’s a SeekingAlpha article out on AMBA today that leads off saying “The recommendation remains to steer clear of the stock for now.” But here are a few other quotes from the article:

  • “The stock even trades at only 14x EPS estimates for the current fiscal year making one wonder if the high-definition video chip supplier is actually a value play”

  • “new chips along with the launch of the GoPro quadcoptor could provide catalysts for the stock after FQ4 [calendar Q1]”

  • “the analyst from Pac Crest came away from conversations with Ambarella suggesting the market was mistaken about the prospects of the company. According to analyst Brad Erickson, earnings estimates for 2016 are too low.”

  • “Right now, the forecast is for FY17 earnings of $3.23. The number is virtually flat with FY16 that ends in three weeks.”

  • “At 13x FY17 estimates, the market is missing the substantial opportunity and the value in Ambarella now.”

  • “The growth opportunities in flying cameras, security monitors, and automotive dash cameras will eventually outweigh the current weakness in action cameras.”

The author basically believes the stock should be avoided due to technical-analysis reasons and because it might take a couple quarters for significant growth to resume (which isn’t a surprise: AMBA is seasonal, and historically fiscal Q4 is usually pretty flat). And he may be very right about the short term: I don’t play that game. What interests me a lot more is what the business will look like a few years down the road, and the upside that might present given the extreme bearish sentiment right now.

Neil
Long AMBA

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Even the losers, get lucky sometime.

  • T. Petty
1 Like

Nice article on Amba presence at CES, pretty awesome technology. I am not so business savvy, but I do like owning a stock where I feel excited about what it can bring to humanity.

http://www.profitconfidential.com/stock/amba-stock-if-youre-…

Earthshine
Long Amba

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