GoPro's (GPRO) Q4 Warning Likely to Weigh on Ambarella (AMBA), Says Deutsche Bank
Deutsche Bank analyst Ross Seymore thinks soft preliminary Q4 results from GoPro (NASDAQ: GPRO) will weigh on shares of Ambarella (NASDAQ: AMBA). Both stock traded lower after-hours Wednesday following an announcement from GoPro.
"After the close today, GPRO negatively preannounced revenues of $435m (+9% q/q) vs prior guidance of $500-500m (+25-37% q/q implied). We believe GPRO represented 30-35% of AMBA’s revenues last year, and while AMBA clearly already accounted for some GPRO weakness in its F4Q guide (-28% to -30% q/q implied, with Sports/Wearables growth weaker than corp avg (DBe -57% q/q)), GPRO’s preannouncement suggests incremental weakening as C4Q progressed, a dynamic that we expect to weigh on AMBA’s business and share price," said Seymore.
"Given choppy near-term fundamentals, we maintain our Hold on AMBA," added the analyst.
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Shares of Ambarella closed at $44.50 yesterday.