Chardan Capital Markets analyst, Marc Estigarribia, thinks the weakness from GoPro will flow through to Ambarella (NASDAQ: AMBA) but after this works its way through, there are developing products that could drive future growth.

The market continues to slaughter GPRO (down another 25%) and AMBA continues to correlate downward. Since yesterday’s close, GPRO has traded down >70% YoY and down ~20% since start of 2016. AMBA has been off 26% YoY and 20% YTD2016.

AMBA cited weakness from its Wearables Sports segment (~30% from GPRO), as the inventory glut is worked through. This glut could impact results for half a year or more. Expect the drag to continue until it provides visibility of a stabilization and/ or turn around for its Consumer segment.

CES provided AMBA with an opportunity to break free from GPRO. Management’s presentation addressed new IP and innovative products from its H2/ H12 chips, which deliver 4K Ultra HD at 60/ 30 frames per second with low power consumption. Other products include MotorVu 3D 360 degree Surround View electronic mirror solutions for automotive OEMs and low power S3L solution for cloud based home monitoring and professional IP cameras.

No change to Neutral rating or $90 PT.

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Shares of Ambarella closed at $44.59 yesterday.