NEW YORK (TheStreet) -- Ambarella (AMBA) - Get Report stock is higher by 7.98% to $63.14 in afternoon trading on Monday, after Stifel noted that the company will likely beat earnings expectations and prove its success beyond its relationship with wearable camera-maker GoPro (GPRO).
Based in Santa Clara, CA, Ambarella is a developer of semiconductor processing solutions and is GoPro's key chip supplier. The company is scheduled to report its fiscal 2016 third quarter financial results after the market close on Thursday.
GoPro stock has tumbled in recent weeks, and Stifel writes that Ambarella's upcoming earnings report might allow Ambarella's stock to dissociate from GoPro shares, Barron's reports.
Ambarella's sales can improve 20% to 25% on an annual basis, as growth within the IP security market and automobile driver applications reduce the company's reliance on the sports camera market, according to Stifel, Barron's adds.
Stifel has a "buy" rating and $115 price target on the stock.
Separately, 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 a few notable strengths, 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. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AMBA's very impressive revenue growth greatly exceeded the industry average of 11.0%. Since the same quarter one year prior, revenues leaped by 79.3%. 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 5.15, which clearly demonstrates the ability to cover short-term cash needs.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, AMBARELLA INC's return on equity exceeds that of the industry average and significantly exceeds that of 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 ($3.06 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 148.1% when compared to the same quarter one year prior, rising from $9.31 million to $23.10 million.
- You can view the full analysis from the report here: AMBA
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.