Ambarella's (AMBA) Price Target Raised to $75 at Pacific Crest as Drones Expected to be 'Huge' this Holiday
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Pacific Crest maintained an Overweight rating on Ambarella (NASDAQ: AMBA) and raised its price target to $75.00 (from $53.00). Analyst Brad Erickson said drones are expected to be "huge this holiday."
In a separate note, Erickson said GoPro (NASDAQ: GPRO) checks indicate a three-SKU holiday lineup versus prior expectations of two. In his view, this and positive drone commentary for the holiday are "promising."
"Specialty drone store commentary indicates huge holiday builds are coming," said Erickson. "After talking with 12 specialty drone retailers, we believe drone sell-through over the past several months has been in line with expectations. Based on management commentary and retailer feedback, we expect a rush of new products for the holiday, many of which at lower price points and from new entrants to the space. Thus, while we expect tailwinds to Ambarella’s October quarter, sell-through will determine whether this momentum is sustainable."
"Ambarella has consistently outexecuted expectations since going public, and we expect the same this quarter. Ambarella has exceeded revenue and earnings expectations by an average of 4.8% and 29.2%, respectively, over the past 13 quarters," added the analyst. "Due to our views of GoPro bringing three SKUs instead of two (see our GPRO note, also published today) and positive drone reseller commentary around holiday builds, we are raising our estimates slightly."
Shares of Ambarella closed at $70.54 yesterday.
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