"With AMBA shares up 65% YTD in 2014, vs. 30.3% for the SOX Index and 15.1% for the NASDAQ Composite, we note the company now trades at one of the richest valuations in our coverage universe," Needham said about the California-based semiconductor processing solutions company, which specializes in HD video capture, sharing and display.
Analysts cited several factors that they believe may cause AMBA to underperform its peers in 2015, including a rapid deceleration in year-to-year revenue growth during the year, management expectations that gross margin will compress in C2H15, and pricing pressure from its largest customer, GoPro (GPRO) .
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Separately, TheStreet Ratings team rates AMBARELLA INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMBARELLA INC (AMBA) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."