Skip to main content

NEW YORK (TheStreet) -- Ambarella (AMBA) - Get Ambarella Inc. Report stock is gaining 9.43% to $44.55 on heavy trading volume on Tuesday afternoon following an upgrade at Morgan Stanley.

So far today, 3.2 million shares of Ambarella have been traded vs. its average daily volume of 1.8 million shares.

The Santa Clara, CA-based camera chipmaker was upgraded to "overweight" from "equal weight" by Morgan Stanley analysts, who explained that the GoPro (GPRO) supplier will see significant growth without the struggling action camera maker.

"Other core growth segments such as autos, drones, consumer surveillance cameras, and wearables (ex GoPro) should continue to drive robust growth," Morgan Stanley analysts wrote in a note this morning.

Wearable camera chip sales and revenue from the Chinese surveillance industry are expected to rebound in the second half of the year, analysts noted.

Scroll to Continue

TheStreet Recommends

Additionally, Ambarella's computer vision processors could "add strategic value" to the company, once the chip is released in the 2016 fourth quarter. Computer vision chips are programed to take, interpret and deliver videos.

"Over time, we believe that all of Ambarella's chip will have some form of computer vision capabilities, either in the form of add-on software/firmware or algorithms that are built directly on the chip," analysts added.

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.

Image placeholder title