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Shares of Ambarella (AMBA - Free Report) were down more than 6.3% in late morning trading Tuesday after an analyst report revealed that the camera chipmaker might have been excluded from its largest customer’s latest product.
Indeed, a note from Pacific Crest asserted that Chinese drone manufacturer DJI Innovations may not have used Ambarella has the video processing provider for its new drone, the $499 Spark.
Pacific Crest analyst Brad Erickson said that he believes DJI has “finally dual-sourced” based on “conversations with DJI customer service.”
“While [we] do not expect near-term risk to estimates from the socket loss, if the Spark cannibalizes DJI’s Phantom or DJI uses a similar chipset for future products, it could become a material headwind to revenue and earnings,” the analyst said.
The Pacific Crest note also mentioned that Ambarella has traded up 23% since Intel (INTC - Free Report) bid to acquire Mobileye (MBLY - Free Report) , primarily because it is one of the few pure plays left with video processing technology geared towards autonomous driving.
However, the analysts noted that Ambarella will likely not see material revenue from advanced driver-assistance systems or autonomous driving for the next three to four years, and therefore, the “autonomy premium” is now priced in.
Overall, Pacific Crest downgraded AMBA to “sector weight” from “overweight.” For now, Ambarella remains a Zacks Rank #3 (Hold).
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeneyon Twitter!
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Why Is Ambarella (AMBA) Stock Down Today?
Shares of Ambarella (AMBA - Free Report) were down more than 6.3% in late morning trading Tuesday after an analyst report revealed that the camera chipmaker might have been excluded from its largest customer’s latest product.
Indeed, a note from Pacific Crest asserted that Chinese drone manufacturer DJI Innovations may not have used Ambarella has the video processing provider for its new drone, the $499 Spark.
Pacific Crest analyst Brad Erickson said that he believes DJI has “finally dual-sourced” based on “conversations with DJI customer service.”
“While [we] do not expect near-term risk to estimates from the socket loss, if the Spark cannibalizes DJI’s Phantom or DJI uses a similar chipset for future products, it could become a material headwind to revenue and earnings,” the analyst said.
The Pacific Crest note also mentioned that Ambarella has traded up 23% since Intel (INTC - Free Report) bid to acquire Mobileye (MBLY - Free Report) , primarily because it is one of the few pure plays left with video processing technology geared towards autonomous driving.
However, the analysts noted that Ambarella will likely not see material revenue from advanced driver-assistance systems or autonomous driving for the next three to four years, and therefore, the “autonomy premium” is now priced in.
Overall, Pacific Crest downgraded AMBA to “sector weight” from “overweight.” For now, Ambarella remains a Zacks Rank #3 (Hold).
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade, which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>