Dallas, Texas 06/23/2015 (Financialstrend) – Ambarella Inc (NASDAQ:AMBA)‘s pullback in the market is a point of concern, having clocked highs of $127 a share, in the recent past. Having been hit by overvaluation sentiments, it is still unclear how further the stock can plummet as bear’s continue to take a toll on it. CNBC’s Mad Money host, Jim Cramer, has already acknowledged that the stock may have overheated in the wake of the recent rally.
Ambarella Long Term Potential
However, the analyst believes there is still some value to be generated from the stock in the wake of the recent pull back. Ambarella Inc (NASDAQ:AMBA) long-term story remains compelling according to the analyst as the company continues to produce the best products in the industry. Ambarella also enjoys the benefit of being exposed to high-end markets especially on growing chips demand from GoPro.
Cramer believes Ambarella should be trading at a relatively higher premium on the fact that its revenue growth metrics remains strong compared to the average semiconductor stock. Last year, the company registered a 38.5% growth in sales; this year’s sales are expected to grow by 48.6%, which could push the stocks sentiments even higher.
All the positives going for the company could make it a potential takeover candidate according to the Mad Money host. Ambarella Inc (NASDAQ:AMBA) has become relatively inexpensive in the wake of the recent spectacular quarter that would justify another company wanting to acquire it.
Currently, Ambarella is paying the price of recording an enormous run over a short period of time. Overvaluation sentiments are only expected to increase especially on research firm Citron Research reiterating that the stock deserves to trade at the $60 mark.
Concerns that Ambarella Inc (NASDAQ:AMBA) could be a victim of commoditization in the business of selling chips could also come to haunt the stock going forward. Bears are also raising concerns that the company is over-reliant on GoPro Inc (NASDAQ:GPRO) something that may work against it, should camera sales slow.