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Can GoPro Continue To Be A Hero For Ambarella Going Forward?

Deutsche Bank remains on the sidelines on the shares of Ambarella Inc , as it is wondering whether the key customer GoPro Inc  would continue to contribute substantially going forward.

Despite reporting better-than-expected third-quarter numbers, shares of Ambarella fell more than 8 percent as inventory concerns weighed on the fourth-quarter outlook, which also missed the Street's view.

Ambarella's Quarterly Gist

  • Q3 EPS: $1.11 vs. estimated $0.94.
  • Revenue: $100.5 million vs. estimated $97.3 million.
  • Q4 Revenue Guidance: $84 million–$87 million vs. estimated $90 million.

Commentary

Ambarella’s lower-than-expected fourth-quarter forecast was attributed to overall seasonality and potential inventory concerns that could hurt revenue in early FY 2018.

Santa Clara, California-based Ambarella, which makes mountable and wearable cameras, expects to have greater visibility after the holiday season.

“Overall, the co’s technology and multiple long-term drivers remain compelling (Drones, IP Security, Computer Vision), but hyper-seasonality in Sports/Wearables leaves us on the sidelines until greater clarity on sell-through/inventory levels emerges,” analyst Ross Seymore wrote in a note.

As such, Seymore maintains his Hold rating and cut the price target to $65 from $68.

The analyst also lowered his fourth-quarter revenue/PF EPS estimate to $87 million/$0.75 from $96 million/$0.89.

At last check, Ambarella stock was down 11.08 percent at $54.59, while shares of GoPro, perhaps in a sympathy move, were down 1.63 percent on the day to trade at $9.66.

Latest Ratings for AMBA

DateFirmActionFromTo
Nov 2016KeyBancMaintainsOverweight
Sep 2016Roth CapitalInitiates Coverage onBuy
Aug 2016KeyBancMaintainsOverweight

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