Analyst Sees Ambarella Growth Fueled By GoPro

Ambarella Inc (NASDAQ: AMBA)'s blistering revenue growth continues to draw strength from its key customer GoPro Inc (NASDAQ: GPRO), an analyst said Friday.

Ambarella, which provides chips for video devices and does about 35 percent of its business with GoPro, is slated to post earnings Tuesday.

Ambarella changed hands recently at $90.75, up $1.79. The shares have gained more than 79 percent year-to-date.

Barrington's Ted Moreau Jr. boosted his price target on Ambarella more than 29 percent Friday to $97, maintaining an Outperform rating.

"GoPro remains Ambarella's top customer," Moreau said, noting that the action camera maker is likely to post strong growth through the remainder of 2015.

Moreau cited GoPro's April 29 forecast that its second quarter revenue will come in about 17 percent higher than the Wall Street consensus of $332 million.

Moreau increased his revenue growth estimate for Ambarella to 68 percent, from 62 percent, citing GoPro's second quarter guidance.

Ambarella has said 64 percent of its revenue last year derived from its five largest customers, which it didn't identify.

In 2015, 94 percent of Ambarella's revenue was derived from the camera market, where the company has seen wildly shifting trends.

For example, four years ago so-called pocket video devices accounted for 40 percent of Ambarella's revenue. But smartphones drove that market to zero for Ambarella last year.

"We expect shifts in consumer use of video to continue to change over time," Ambarella told investors in a recent annual report.