Ambarella stock prediction as shares rocket 19% after earnings

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Dec 1, 2021
  • Ambarella shares on Wednesday skyrocketed nearly 19%.
  • The company announced its FQ3 results Tuesday after markets closed.
  • AMBA beat analyst expectations whilst also guiding Q4 revenue above estimates.

On Wednesday Ambarella Inc. (NASDAQ:AMBA) shares spiked by nearly 19% following Tuesday’s market-beating results. The company announced its most recent quarter revenue and earnings after markets closed, outperforming the consensus for analyst expectations. AMBA also issued FQ4 revenue guidance above Street forecasts.

The company posted FQ3 non-GAAP earnings per share of $0.57, outperforming the average for analyst estimates of $0.49. In addition, Ambarella’s GAAP EPS of $0.02, was higher than the expectation of -$0.04, while revenue for the quarter surged by 64.3% from the same quarter in 2020 to $92.17 million, surpassing estimates by $1.82 million.

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Ambarella’s fiscal fourth-quarter revenue guidance of about $88.5 million to $91.5 million was also above the average Street estimate of $88.2 million.

Is Ambarella stock overvalued?

From an investment perspective, Ambarella shares trade at a steep forward P/E ratio of 112.20, making the stock too expensive for bargain hunters.

In addition, analysts expect its earnings per share to decline by more than 27% this year, before rising by 29% next year.

Therefore, the stock may also not be an ideal option for growth investors.

Source – TradingView

Technically, Ambarella shares seem to have recently spiked to create an upward price gap in the intraday chart. As a result, the stock has now rallied closer to the overbought conditions of the 14-day RSI.

Therefore, investors could target technical pullback profits at about $188.22, or lower at $171.92, while $227.18 and $245.18, are crucial resistance levels.

In summary, now seems to be a good time to swoop for profits.

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