GoPro's (GPRO) Negative Announcement Keeps Needham & Company Sidelined on Ambarella (AMBA)
Needham & Company reiterated a Hold rating on Ambarella (NASDAQ: AMBA) following GoPro's (NASDAQ: GPRO) negative 4Q pre-announcement. GoPro exposure has been the primary overhang on AMBA shares over the past six months. Needham views the new estimates as a reflection of a very cautious view on future GoPro unit shipments.
Analyst Quinn Bolton commented, "We are reducing our sports camera revenue estimates following GoPro's 4Q15 negative pre-announcement. As GoPro exposure has been the primary overhang on AMBA shares over the past six months, in our opinion, our new estimates reflect a very cautious view on future GoPro unit shipments. Our intent is to remove as much GoPro risk as possible from our forward estimates in hopes of removing the GoPro overhang on valuation. As the rest of AMBA's business is healthy and growing and with shares now trading at approximately 10X our new CY17 NG EPS estimates plus net cash per share, we believe further downside risk to AMBA shares may be limited."
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Shares of Ambarella closed at $44.59 yesterday.