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Mark Holder

Ambarella: Can The Company Move Beyond GoPro?

Ambarella (AMBA) traded down about 10% last week heading into earnings due to concerns over losing new products with key customers. At $60, the video chip company has apparently loss a socket at DJI and Nest. Pacific Crest downgraded the stock on the news while Stifel wants investors to buy the stock with only a $65 price target. Ongoing issues with GoPro (GPRO) aren't going to help either. 

Investors should assume a FQ2 beat after the close. The average analyst estimate is for $0.36 and $63.5 million. Ambarella typically guides so low that one should expect results to easily top $0.40. My concern though is with guidance for the rest of the year. Expectations are already for an EPS dip next quarter. 

Ambarella has some interesting technology coming out with the ComputerVision chip later this year, but the company faces the possibility of constantly watching legacy revenue products shift down to cheaper chip options. 

Anybody buying the stock into earnings? Come back and discuss earnings after the close. 

Disclosure: No position

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