NEW YORK (TheStreet) -- Shares of Ambarella (AMBA) - Get Report are up 1.95% to $88.90 in early market trading after KeyBanc Capital Markets increased its price target to $96 from $78 and reiterated its "overweight" rating.
"We are raising estimates and our target on strong GoPro checks, combined with an updated longer-term view of AMBA's market opportunity," said KeyBanc Analyst Brad Erikson. "We think the company could earn $5 or more in C2018, implying upside to the mid-$90s."
This action comes after the Santa Clara, CA-based developer of semiconductor processing solutions saw inventory of GoPro video cameras decline month over month, leading KeyBanc analysts to believe that sales run rates have increased recently, likely driven by incremental bundling with gift cards and memory cards.
Ambarella has unique exposure to a host of diversified growth drivers like China action cameras, video surveillance, police cameras and drones, according to KeyBanc analysts.
TheStreet Ratings team rates AMBARELLA INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMBARELLA INC (AMBA) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, impressive record of earnings per share growth and compelling growth in net income. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AMBA's very impressive revenue growth greatly exceeded the industry average of 0.5%. Since the same quarter one year prior, revenues leaped by 61.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- AMBA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.46, which clearly demonstrates the ability to cover short-term cash needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, AMBARELLA INC's return on equity exceeds that of both the industry average and the S&P 500.
- AMBARELLA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AMBARELLA INC increased its bottom line by earning $1.56 versus $0.85 in the prior year. This year, the market expects an improvement in earnings ($2.22 versus $1.56).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 219.4% when compared to the same quarter one year prior, rising from $5.53 million to $17.67 million.
- You can view the full analysis from the report here: AMBA Ratings Report