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Why KeyBanc Is 'Incrementally More Constructive' On Ambarella

Jayson Derrick

KeyBanc Capital Markets turned "incrementally more constructive" on Ambarella Inc (NASDAQ: AMBA) after hosting investor meetings with management with conversations ranging from new product ramps and China.

The Analyst

KeyBanc's John Vinh maintains a Sector Weight rating on Ambarella.

The Thesis

KeyBanc's chat with Ambarella's management prompted the research firm to become "increasingly confident" revenue can stabilize in the back half of 2019 and show sequential growth in 2020, Vinh said in a research report. The three reasons to support this stance include:

  • Consumer revenues are now mostly derisked;
  • Car recorder design wins are likely to ramp from favorable industry trends moving from after-market devices to OEMs and Ambarella's core advantages over its peers including programmability and performance; and
  • A new CV AI security camera could see design wins.

Vinh said Ambarella's China-related concerns appear to have eased for now with no reason to expect incremental risk to revenues associated with two notable clients, Hikvision and Dahua. Huawei's entrance into the security market is likely to create a conflict of interest that could result in Ambarella at the very least maintaining if not increasing its market share in China.

Price Action

Ambarella's stock traded about 1.5 percent higher to $49.39 per share Monday afternoon.

Related Links:

Ambarella Analysts See Long-Term Opportunity In Computer Vision

Despite China Overhang, Morgan Stanley Remains An Ambarella Bull

Photo courtesy of Ambarella.

Latest Ratings for AMBA

Date Firm Action From To
Mar 2019 Craig-Hallum Upgrades Hold Buy
Aug 2018 Bank of America Downgrades Neutral Underperform
Aug 2018 Deutsche Bank Maintains Hold Hold

View More Analyst Ratings for AMBA
View the Latest Analyst Ratings

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