Canaccord Sees Revenue Surprise In Ambarella Inc.'s Xiaomi Deal

Ambarella Inc.'s AMBA deal to supply action camera components to Chinese manufacturers Xiaomi will result in higher than expected revenue, an analyst said Monday. Canaccord's Matthew D. Ramsey raised his target on Ambarella more than 9 percent to $81 and reiterated a Buy rating on the video chip maker. San Mateo, California-based Ambarella changed hands recently at $73.75, up $3.40. The shares have gained nearly 46 percent in the year to date. Ambarella, which derived nearly 40 percent of its fourth-quarter revenue indirectly from GoPro Inc. GPRO, up from 21 percent a year earlier. Ambarella had until recently been seen by investors as a cheaper proxy alternative to owning high-flying GoPro shares, according to The Wall Street Journal. http://www.wsj.com/articles/spreading-bets-on-ambarellas-chips-1425493325 Xiaomi unvelied plans recently to sell an inexpensive action camera in China, with componentry suppled by Ambarella. Ramsey said Amberalla's unit pricing of chips sold to Xiaomi will be "much higher than expected." Strong sales to Xiaomi, plus solid growth at GoPro, and "the potential to win new sports camera customers" could push 2016 Ambarella earnings toward $3 a share, Ramsey said. Wall Street on average expect adjusted Ambarella earnings of $2.24 a share for the year ending January 2017.