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Analyst Sees Revenue Surprise In Ambarella's Xiaomi Deal

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Ambarella Inc (NASDAQ: AMBA)'s deal to supply action camera components to Chinese manufacturer Xiaomi will result in higher than expected revenue, an analyst said Monday.

Canaccord's Matt Ramsay raised his target on Ambarella more than 9 percent to $81 and reiterated a Buy rating on the video chip maker.

The San Mateo, California-based Ambarella changed hands recently at $73.75, up $3.40. The shares have gained nearly 46 percent in the year to date.

Ambarella derived nearly 40 percent of its fourth-quarter revenue indirectly from GoPro Inc (NASDAQ: GPRO).

Related Link: The Massive Call Moving GoPro Today

Ambarella had until recently been seen by investors as a cheaper proxy alternative to owning high-flying GoPro shares, according to The Wall Street Journal.

Xiaomi unveiled plans recently to sell an inexpensive action camera in China, with components supplied by Ambarella.

Ramsay said Amberalla's unit pricing of chips sold to Xiaomi will be "much higher than expected."

Strong sales to Xiaomi, plus solid growth at GoPro, and "the potential to win new sports camera customers" could push 2016 Ambarella earnings toward $3 a share, Ramsey said.

Wall Street, on average, expects adjusted Ambarella earnings of $2.24 a share for the year ending January 2017.

Latest Ratings for AMBA

Jan 2018OppenheimerUpgradesPerformOutperform
Dec 2017Morgan StanleyMaintainsOverweight
Oct 2017Canaccord GenuityMaintainsBuy

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Posted-In: Canaccord Matt Ramsay XiaomiAnalyst Color Price Target Reiteration Analyst Ratings


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