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Analysts Positive Following Ambarella Inc’s (AMBA) Recent Investor Meeting

By Howard Kim 

Ambarella Inc (NASDAQ:AMBA), a chipmaker and leader in the semiconductor sector, hosted an investor meeting last week. The stock has been in the news due to GoPro’s disappointing performance; one of Ambarella’s largest customers. Analysts Brad Erickson and Matt Ramsay weighed in light of the company’s recent investor meeting.

Yesterday, analyst Brad Erickson from Pacific Crest maintained his Overweight rating for the stock. However, he lowered his price target to $102 from $123. According to the analyst, the lower price target is linked to GoPro. He said, “Recent weak GoPro data have us lowering our target to $102 from $123, but, longer term, we are bullish on AMBA once a potentially soft GoPro Q4 is fully digested in the name.”

In regards to guidance, Erickson said, “We are adjusting our estimates to reflect an earlier flagship refresh from GoPro consistent with our new GoPro estimates. However, our F2016 and F2017 estimates remain unchanged as we do not believe sell-through has worsened materially since Ambarella provided its soft wearable camera outlook on its last earnings conference call on Sept. 1.” He expressed confidence in the company’s other businesses to contribute to their target of 20-25% growth next year.

Separately, Matt Ramsay from Canaccord Genuity maintained his Buy rating for the stock yesterday with a price target of $105. According to The Fly, Ramsay’s key takeaways from the investor day are that in spite of 55% drop in the company’s stock over the past 2 months, there’s no change in the company’s “long-term technology differentiation, market growth drivers, and target operating model.” Citing the shift in sentiment as the reason behind the dropping share price, he sees the recent pullback as a buying opportunity.

According to the 12 analysts polled by TipRanks in the last 3 months, 6 analysts have rated AMBA as a Buy and 6 have rated it as Hold. None of the analysts have recommended to sell the stock. The consensus price target for the stock is $105.88, marking a 90% upside over current levels.