Analysts weighed in yesterday on technology giant Apple Inc. (NASDAQ:AAPL) and semiconductor company (NASDAQ:AMBA). The analysts reflect on Apple iPhone sales concerns, and the primary overhang for Ambarella’s stock – GoPro.
BTIG analyst Walter Piecyk joins the herd of analysts cutting short-term iPhone estimates, as the noise and consistency of supply chain data points has become too loud to ignore. However, the analyst is reiterating his Buy rating and not revising his price target of $160, which implies an upside of 61% from current levels.
Piecyk noted, “We lowered our F2016 EPS estimate by $0.20 to $9.80 and introduced an initial F2017 EPS estimate of $10.40.” In addition, “We lowered our iPhones unit estimates by 4 million to 76 million units in the December quarter and by 6 million to 56.5 million units in the March quarter.” Furthermore, “We expect more than 6% annual EPS growth in F2016 and F2017 primarily based on our expectation that the company spends $40 billion per year on share repurchase.”
The analyst concluded, “While our cuts are primarily driven by a more conservative global outlook, we should have acted earlier in noting the weakness in the Q4 phone upgrade rate of wireless operators in the United States. This became apparent as we were overhauling the models of those companies. Despite upgrade rate contraction in Q4 2015, we continue to expect phone payment and leasing plans to accelerate upgrade cycles in the United States in 2016 and 2017, as shown in the tables below. As phone upgrade programs mature, there could be different experiences across each operator.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Walter Piecyk has a yearly average return of 8.6% and a 50% success rate. Piecyk has an 23.3% average return when recommending AAPL, and is ranked #630 out of 3607 analysts.
Needham analyst Quinn Bolton reiterated a Hold rating on shares of Ambarella, following GoPro’s negative pre-announcement, which should weigh on Ambarella.
Bolton wrote, “We are reducing our sports camera revenue estimates following GoPro’s 4Q15 negative pre-announcement. As GoPro exposure has been the primary overhang on AMBA shares over the past six months, in our opinion, our new estimates reflect a very cautious view on future GoPro unit shipments. Our intent is to remove as much GoPro risk as possible from our forward estimates in hopes of removing the GoPro overhang on valuation. As the rest of AMBA’s business is healthy and growing and with shares now trading at approximately 10X our new CY17 NG EPS estimates plus net cash per share, we believe further downside risk to AMBA shares may be limited.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Quinn Bolton has a yearly average return of 15.3% and a 57% success rate. Bolton has a 64.6% average return when recommending AMBA, and is ranked #72 out of 3607 analysts.
Out of the 16 analysts polled by TipRanks, 9 rate Ambarella stock a Buy, while 7 rate the stock a Hold. With a return potential of 111%, the stock’s consensus target price stands at $88.50.