Chardan Capital reaffirms Ambarella (Nasdaq: AMBA) with a Neutral rating and $90 price target following Q3 results and outlook issued Thursday night.

Analyst Marc Estigarribia noted that the Wearables Sports segment pressured results from other areas of Ambarella's report: Positive growth signs from its other segments, namely IP security, flying cameras (drones) and automotive aftermarket (dash cams), as company works hard to diversify. Also, the introduction of three new chips (A12S, A9SE and S3L SOCs) looks to offset, however wearbles camera division is expected to weigh down growth for the next two quarters.

On the IP security market in China, Estigarribia said, China remains soft for its IP security market, however company is starting to see recovery signs with year-end promotional pushes from customers. Management is optimistic but cautious.

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