Pac Crest: Ambarella benefiting from drone surge, GoPro demand steady
Jul 17 2015, 14:59 ET | About: Ambarella (AMBA) | By: Eric Jhonsa, SA News Editor
“Drones are literally flying off the shelves,” reads the title of Pac Crest’s most recent bullish note on Ambarella. The firm states checks point to strong demand for early drone market leader DJI’s newly-launched Phantom 3 - it uses an Ambarella video processor, and supports 4K video recording through its Professional model - with Best Buy having “sold out its entire U.S. inventory with no timeline for replenishment.”
Pac Crest estimates every 25K-30K drone sales boost Ambarella’s EPS by $0.01. In June, Ambarella forecast FQ2 (ends in July) will be its first quarter where drone-related SoC sales account for over 10% of its revenue.
The firm also reports checks point to “steady” demand for top Ambarella client GoPro, even though initial demand for GoPro’s tiny/cube-shaped Session camera appears “lukewarm.” It still thinks “the overall GoPro portfolio carries meaningful upside potential for Ambarella versus Street expectations through the October quarter, when [GoPro’s] high-end refresh should drive a significant sequential uptick in volumes.”
GoPro, whose cameras have been attached to many 3rd-party drones (including some DJI models), plans to launch its first drone in 1H16.