Ambarella Analysts Laud Accelerating Computer Vision Momentum Following Blowout Q2

Ambarella, Inc. AMBA, a provider of home security and professional surveillance solutions, reported Tuesday with better-than-expected second-quarter results and issued upbeat guidance for the third quarter.

The Ambarella Analysts: Morgan Stanley analyst Joseph Moore maintained an Overweight rating and $137 price target for Ambarella shares.

Rosenblatt Securities analyst Kevin Cassidy maintained a Buy rating and increased the price target from $145 to $160. The firm maintained the stock as its top pick.

Needham analyst Quinn Bolton maintained a Buy rating and $140 price target.

KeyBanc Capital Markets analyst John Vinh maintained a Sector Weight rating.

Ambarella Finds Growth In Unexpected Places, Morgan Stanley Says: Ambarella continues to post very strong results thanks to the progress of computer vision in expanding the TAM within both surveillance and automotive, Morgan Stanley analyst Moore said.

"Within surveillance, moving from traditional video processing to computer vision grows the market, more than doubles Ambarella's dollar content, and grows Ambarella's market share," the analyst said.

The impact, he said, is starting to spread from professional surveillance to early stage computer vision deployments in home surveillance in the second half. 

Ambarella is now seeing growth from areas where it remains strong while also finding growth from unexpected places such as fleet management, Moore said.

Among Morgan Stanley's key takeaways from the results are strong across-the-business momentum despite supply constraints; the automotive fleet management opportunity; a bigger-than-expected Chinese surveillance opportunity and breadth in customer base.

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Ambarella Is Approaching Key Inflection Point, Rosenblatt Says: Investor concerns around supply constraints near-term remain but the real story is that Ambarella's CVflow architecture has reached critical mass, Rosenblatt analyst Cassidy said.

The company has made the transition to higher valued Artificial Intelligence enabled Internet of Things or CVflow products, the analyst said. 

"The CVflow products are driving revenue growth, expanding operating margins and increasing earnings," he said.
Fiscal year 2022 is a major inflection point of Ambarella, Cassidy said, citing the company's co-founder and CEO Fermin Wang.

Ambarella On Track For Record Sales In 2022 Despite Supply Challenges, Needham Says: While Ambarella's wafer supply from Samsung's Austin, Texas fab is recovering, management does not anticipate a material improvement in the industrywide supply constraints, Needham analyst Bolton said.

In addition to extended lead times for wafers and substrates, Ambarella's outlook is also constrained by shortages from its customers' other suppliers, the analyst said. 

Despite these supply challenges, the company sees fiscal year 2022 sales reaching a new record, auto sales more than doubling and CV products exceeding 25% of fiscal year 2022 sales, Needham said.

KeyBanc Says CV Momentum Supported by New Design Wins and Share Gains: CV momentum is increasing, driven by new design wins and share gains, KeyBanc analyst Vinh said.

The company is seeing strong demand for the CV portfolio, with more than 240 unique customers purchasing CV parts and development systems, and 60 of those unique customers achieving production status in the first half of 2021, the analyst said. 

Ambarella is gaining share in the professional security market, with Bosch introducing three families of cameras using CVflow AI Vision SoCs, Milesight introducing three SKUs based on CV25 and FSAN introducing a non-contact facial temperature measurement system based on CV28M, he said. 

In automotive, Ambarella is gaining traction in the fleet management market, with Yandex, KeepTruckin and Solera announcing products using the company's CV, Vinh said.

AMBA Price Action: Ambarella shares were trading 26.49% higher at $131.01 Friday afternoon. 

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