Ambarella ( NASDAQ: AMBA ) started Wednesday of a rough note, as the video chipmaker's shares fell almost 7% as Wall Street showed its displeasure with the company's first-quarter business outlook.
On Tuesday, Ambarella ( AMBA ) said that it expects its first-quarter revenue to be between $60M and $64M, which would fall far short of analysts' estimates of $77.1M in sales, and the $90.3M in revenue in the same period a year ago.
Chief Executive Fermi Wang said in a statement that Ambarella ( AMBA ) was still "experiencing a more pronounced slowdown as they [company customers] reduce inventory." Wang said that despite the inventory situation, "Our customers indicate end market demand is healthy."
Wang tried to assuage investors' fears, and added that Ambarella ( AMBA ) doesn't currently expect "these existing cyclical factors to cause future quarter revenue to decline below our [first-quarter] guidance."
Roth MKM analyst Suji Desilva cut his rating on Ambarella's ( AMBA ) stock to neutral from buy due to the company's first-quarter forecast. However, Desilva said that Ambarella's ( AMBA ) issues should be "short lived," as "end demand, particularly in [the] automotive [sector], remains healthy."
Wall Street analysts currently have a consensus buy rating on Ambarella's ( AMBA ) stock, while Seeking Alpha authors give Ambarella ( AMBA ) shares a rating of hold. Seeking Alpha's Quant System, which historically outperforms the stock market, also sees Ambarella shares worthy of a hold rating .
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Ambarella shares fall on weak outlook, Roth MKM rating cut