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GoPros And Drones Bullish For Ambarella, KeyBanc Says

AMBA, GoPro NASDAQ:GPRO - GoPros And Drones Bullish For Ambarella, KeyBanc Says

This holiday season could be huge for Ambarella Inc (NASDAQ: AMBA). According to KeyBanc analyst Brad Erickson, drones are going to be a leading gift idea this year.

Early commentary from specialty stores indicates a lot of buzz about drones heading into the second half of 2016. KeyBanc sees Ambarella as best-in-class among HD video processing brands.

In addition to drone projections, Erickson believes an additional GoPro Inc (NASDAQ: GPRO) SKU this holiday season will be the perfect storm for Ambarella.

“Holiday sell-through matters more than anything, but with unmatched technology, broad-based secular growth exposure and no exposure to PCs or smartphones, we remain Overweight,” he said of Ambarella.

In addition to reiterating its Overweight rating, KeyBanc also upped its price target for the stock to $75, which represents a 22x multiple on the firm’s 2018 EPS projections.

Erickson is also increasingly optimistic about GoPro’s holiday season, but he remains cautious on the stock. Erickson is “raising estimates, but waiting to see reception on new cameras and drone before becoming more constructive on the name.”

According to KeyBanc, the reception among drone resellers for the Karma has been “lukewarm,” but the firm has raised estimates for the new Hero 5 “basic” model.

KeyBanc maintains a Sector Weight rating on GoPro’s stock.

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Aug 2016KeyBancMaintainsOverweight
Jun 2016Deutsche BankMaintainsHold
Apr 2016OppenheimerInitiates Coverage onPerform

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