Chip maker Ambarella Inc. (NASDAQ:AMBA) stepped into the field with a promise and is expected to do well, which is evident from the report given by Pacific Crest Securities analysis. The analyst Brad Erickson of the latter firm, gave an estimate regarding Ambarella Inc. (NASDAQ:AMBA), whereby he elevated the expected amount of revenue and consequent earnings of the company. It seems that GoPro Inc. (NASDAQ:GPRO) and its progressive revenue for the first quarter of fiscal year 2015 is the pivotal factor in play behind these revised figures.
This is because, Ambarella Inc. (NASDAQ:AMBA) has expanded its clientage in which GoPro Inc. (NASDAQ:GPRO), one of the most esteemed video maker company, is its biggest customer. Different innovative products of GoPro Inc. (NASDAQ:GPRO) such as its HD sports camera and Hero series are powered by semi-conductor chips, are manufactured by Ambarella Inc. (NASDAQ:AMBA). GoPro Inc. (NASDAQ:GPRO) alone has contributed in building up almost one quarter of Ambarella Inc.’s (NASDAQ:AMBA) gross revenue.
As a consequence, the Q4FY15 has seen a rise in the company’s expected revenue, from $60 million to $62.1 million. Not merely has the revenue escalated, rather there is also an increase in Ambarella Inc.’s (NASDAQ:AMBA) earnings per share. While previously, they rested at 51 cents; now the figures have increased to 55 cents. As a corollary, analysts have also raised their estimated statistics, regarding Ambarella Inc.’s (NASDAQ:AMBA) generated income for fiscal year 2015. The new figure is of $215.7 million, while the previous one was of $213.6 million. Similarly, the predicted EPS has also seen a rise and stands at a figure of $1.82, contrary to the previous figure of $1.78. This increased EPS implies that the expected generated income of first quarter of fiscal year 2015 will also witness an elevation, i.e. it will see a gradual rise from $58.6 million to $ 59.5 million.
The expected estimates of Ambarella Inc. (NASDAQ:AMBA) for the fiscal year 2016 have also been increased. The previous estimate was of $266.8 million, while the current estimate is of $267.7 million. Following the increase in revenue, the expected EPS also went uphill, from $1.96 to $1.99.
According to a comment of Mr. Erickson; since the stock has gone upwards by a figure of almost 63% following the mid-October initiation, therefore expectations are evidently running very high. The company is having some reservation regarding its fulfillment of the alleged expectations of April-quarter, owing to a downfall in GoPro Inc. (NASDAQ:GPRO) revenue, amounting to almost 25%. However, despite this fact, Ambarella Inc. (NASDAQ:AMBA) would still manage to pull out its target of achieving a growth of almost 25%. Mr. Erickson acknowledged that under-appreciation of earnings of FY17 might prevent Ambarella Inc. (NASDAQ:AMBA) from ascending in the near term. This assertion is all the more supported by the valuation metrics of the upcoming terms as well as the margins of fiscal year 2016 which tend to go down the slope.
Ambarella Inc. (NASDAQ:AMBA) stocks are scrutinized by a total of 14 analysts, out of which eight have awarded it with a Buy rating, while three have put it on Hold. Ambarellas Inc.s’ (NASDAQ:AMBA) shares went uphill by a figure of 7.42% and before the closure of the trading session, the company’s stocks stood at $61.65.
