Canaccord Genuity analyst Matthew Ramsay reiterated a Buy rating and boosted his price target on Ambarella (NASDAQ: AMBA) to $86.00 (from $81.00) following strong guidance from customer GoPro.

Ramsay commented. "We maintain our belief Ambarella's portfolio of highly differentiated application-specific video encode, compression, and analytics processors positions the company for strong sales and earnings growth as HD and UltraHD video capture and compression become increasingly important across several growing consumer and enterprise markets. Further, we believe Ambarella’s investments in video analytics will prove significantly undervalued and provide sustained long-term differentiation and pricing stability. Finally, with ramping sales to large customers in core markets and more material contributions from emerging growth sectors, we believe significant upside to Street estimates is not only possible, but likely. In fact, following very strong GoPro JuneQ guidance, we reiterate our BUY rating and increase our above-consensus estimates as well as our price target from $81 to $86."

The firm also raised FY 2016 EPS from $2.50 to $2.60 and FY 2017 EPS from $3.25 to $3.45.

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Shares of Ambarella closed at $72.01 yesterday.