Analysts Aren't Sure What To Do With Ambarella After Earnings

• Ambarella Inc AMBA's stock is surging in Friday's trading following its Q3 earnings report.
• Analysts on Wall Street have mixed feelings about what they saw from the company in Q3.
• Despite a big earnings beat, Ambarella's Q4 guidance was relatively weak.

Shares of Ambarella were up more than 4.9 percent early Friday after the company's Q3 earnings release, which included in-line revenue and a solid EPS beat. However, the company's guidance wasn't particularly strong, and Wall Street has mixed feelings about the stock looking forward.

Here's what three firms had to say about Ambarella following earnings.

Deutsche Bank

Analyst Ross Seymore calls the company's Q4 guidance “even weaker than expected” and explained that Deutsche Bank remains on the sidelines for now until the company can show signs of stabilization. He notes that the stock's huge pullback in the second half of 2015 no longer makes its valuation prohibitive.

Related Link: GoPro Sales Forecast Lowered After Ambarella's Guidance Whiff, Piper Jaffray Warns

Deutsche Bank lowered its price target for Ambarella from $70 to $60 based on 17x projected 2016 earnings. The firm maintained a Hold rating on the stock.

Pacific Crest

Analyst Brad Erickson agrees that disappointing Q4 guidance on weak GoPro Inc GPRO sales was “a toe stubbing for sure,” but believes the stock is well-positioned to perform well in 2016 given expectations for 15-20 percent annual growth.

Pacific Crest maintained its Overweight rating on Ambarella and its $77 price target.

Chardan

Analyst Marc Estigarribia pointed out that weakness in the company's wearable sports segment may have overshadowed growth in its other segments, including IP security, flying cameras and automotive aftermarket. He expects the company's wearable camera division to “weigh down growth for the next two quarters.”

Chardan maintained its Neutral rating on Ambarella and its $90 price target.

Disclosure: the author holds no position in the stocks mentioned.