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NEW YORK (TheStreet) -- Ambarella (AMBA) - Get Ambarella Inc. Report stock was upgraded to "overweight" from "equal weight" at Morgan Stanley before Tuesday's market open. The firm maintained its $55 price target.

Shares of Ambarella, a Santa Clara, CA-based manufacturer of chips for cameras, are rallying 5.90% to $43.11 in mid-morning trading on Tuesday.

"We have consistently believed that Ambarella has maintained leadership in video processing for high-end cameras, but have remained on the sidelines until now as we thought that the multiple had climbed too high given customer concentration," Morgan Stanley said in an analyst note this morning.

Ambarella's stock has declined 65% from its highs last summer because of weak sales from wearable cameras, especially from its customer GoPro (GPRO), and lower sales from the Chinese surveillance industry.

Recent channel checks in China are more optimistic and Ambarella's revenue can grow significantly without GoPro, analysts noted.

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"Other core growth segments such as autos, drones, consumer surveillance cameras, and wearables (ex GoPro) should continue to drive robust growth," analysts added.

Chips for automotive driver assistance are also expected to "add strategic value" to the company even though the segment will not add substantial revenues in the short term, analysts observed.

Separately, Ambarella has a "buy" rating and a letter grade of B- at TheStreet Ratings because of the company's revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins.

You can view the full analysis from the report here: AMBA

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.

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