Ambarella shares dive amid analysts' caution

Shares of Ambarella (AMBA) are trading lower on Tuesday despite exceeding analyst expectations for its quarterly earnings reported on Tuesday evening. QUARTERLY RESULTS: Ambarella, reported first quarter earnings per share of 4c on revenue of $54.64M. Analysts expected Ambarella to lose (1c) for EPS on revenue of $54.3M. In a statement, Ambarella said that "The unprecedented combination of geopolitical and public health risks, and the associated economic downturn, limit visibility and cause the duration, severity and impact to be unknown." It added that "We believe we are positioned to emerge stronger when the current crisis is over." GUIDANCE: Looking ahead, Ambarella forecast second quarter revenue of $50M, plus or minus 6%, against analysts' consensus estimates of $55.54M. It sees gross margin of 59%-60.5% for the quarter. Q2 VIEW BELOW STREET: Needham analyst N. Quinn Bolton and his team at Needham wrote in a note to investors that the company's Q2 view was lower than the Street consensus. Bolton, who continues to rate the firm Underperform, said he remains cautious on Ambarella shares in the near-term due to its high valuation. Oppenheimer analyst Andrew Uerkwitz maintained a Perform rating given extremely low visibility from COVID-19 and increasingly fluid geopolitical tension. While the analyst believes customer activities and design wins continue to validate Ambarella's competitive position and product roadmap, he says tensions may have a long-term impact on its customers in Asia, and that Ambarella remains vulnerable to secular shifts in those customers' sourcing strategies. PRICE ACTION: Shares of Ambarella are down 10.5%to $55.11 in afternoon trading.