Analysts weighed in on network security company FireEye Inc (NASDAQ:FEYE) and semiconductor company Ambarella Inc (NASDAQ:AMBA). The analysts reflect on FireEye’s upcoming 4Q15 results and Ambarella’s fundamentals.
Wedbush analyst Steven Koenig reiterated a Neutral rating on shares of FireEye, while reducing the price target to $21 (from $27), ahead of the company’s fourth-quarter report, which is scheduled for Thursday, February 11th followed by a call at 5:00 pm ET.
Koenig wrote, “We spoke with a dozen North American resellers who market FEYE products; our conversations were mostly anecdotal, and useful mostly for identifying themes as opposed to pinpointing specific FEYE activity levels. Our reseller checks give us limited visibility to FEYE’s direct channel, which leads about two-thirds of the company’s sales activity and the majority of large deals. Important themes included: (1) FEYE continues to face greater competition, primarily from Palo Alto Networks and Check Point; (2) FEYE is battling a perception that its products are pricey and that competition is catching up; and (3) SMB-focused and regional resellers we talked to are seeing customer interest in FEYE taper off.”
The analyst concluded, “We are reducing our price target based on lower target multiples, to better reflect our perception that FEYE’s competitive position has continued to deteriorate. FEYE’s EV/ revenue multiple (under 3x our FY16 revenue estimate of $803M) is starting to look interesting, but we expect revenue performance to be under pressure – as new products can take many quarters to be shaken out by customers – and we see a risk of heightened employee attrition.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Steven Koenig has a yearly average return of 1.2% and a 34% success rate. Koenig has a -29.3% average return when recommending FEYE, and is ranked #1461 out of 3594 analysts.
Out of the 27 analysts polled by TipRanks, 16 rate FireEye Inc stock a Hold, while 11 rate the stock a Buy. With a return potential of 98%, the stock’s consensus target price stands at $34.44.
Canaccord analyst Matt Ramsay reiterated a Buy rating on shares of Ambarella, with a price target of $90, following a meeting with CEO Fermi Wang and CFO George Laplante at CES, also known as the Consumer Electronics Show.
Ramsay stated, “Ambarella executives demonstrated new 14nm H2 SoCs running 4K HEVC encoding at 60 fps at under 2 Watts power. We believe this product will ramp late in 2016 and prove critical for sports camera and drone vendors to improve battery life and frame rates for UHD video. Ambarella also presented compelling VR recording, auto OEM side and rearview mirror replacement, and non-gimbal drone video stabilization applications for their newest chipsets.”
The analyst concluded, “We maintain our belief Ambarella’s portfolio of highly differentiated application-specific video encode, compression, and analytics SoCs will maintain strong market share against SoC competition and positions the company for strong sales and earnings growth as HD/ UltraHD video capture and compression become increasingly important across several consumer and enterprise markets. Despite the very rocky start to 2016 for AMBA shares, our long-term thesis changes little and we believe the disproportional decline in share price versus changes to strong fundamentals presents a buying opportunity for a highgrowth company now trading at an ex-growth valuation (~10x EPS, ex-cash).”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Matt Ramsay has a yearly average return of -10.4% and a 31.5% success rate. Ramsay has a -39.7% average return when recommending AMBA, and is ranked #3468 out of 3594 analysts.
Out of the 10 analysts polled by TipRanks in the last 3 months, 6 rate Ambarella stock a Buy, while 4 rate the stock a Hold. With a return potential of 81%, the stock’s consensus target price stands at $86.31.