GoPro's Quarter Is Good News For Ambarella, Canaccord Says

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Following GoPro Inc GPRO earnings on Tuesday, Canaccord Genuity's Matthew Ramsay raised estimates and its price target for Ambarella Inc AMBA. The firm reiterated its Buy rating and bumped up the price target by $2 to $122.

With the near-20 percent gain in the stock over the past five trading sessions, that price target is just 3 percent over the last price of $118.18.

Canaccord reiterated that drones are "a big opportunity" for Ambarella, noting that the business could "double each of the next couple years" to 10 million units in 2017. That should help Ambarella's drone revenue rise from $6 million this year to $50 million in 2017.

Also supporting the stock should be the way that Ambarella processors are differentiated. Ramsay said that the processors are better quality, contain efficient compression and have low power demands. Further innovation will only serve to "increase this differentiation," providing the company with an 18 to 24 month competitive lead.

For Ambarella's next earnings report, Canaccord said it expects 2016 sales of $338 million and EPS of $3.26. For 2017, that will increase to $431 million and $4.07.

Year-to-date, Ambarella has seen significant share gains. The stock is up more than 130 percent and approaching its all-time high of $128.06.

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Posted In: Analyst ColorPrice TargetReiterationAnalyst RatingsTechAmbarellaCanaccord GenuityGoProMatthew Ramsay
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