Pacific Crest analyst Brad Erickson weighs in on action-camera maker GoPro Inc (NASDAQ:GPRO) and drone maker Ambarella Inc (NASDAQ:AMBA). The analyst sees bright future for GoPro’s new Hero 5 “basic” model, and sees compelling opportunity in Ambarella as drones are expected to invaded the skies this holiday season. Subsequently, the analyst raises his estimates for both companies. Let’s take a closer look.

GoPro Inc

Pacific Crest’s Brad Erickson provides insight on shares of GoPro after his checks have revealed there will now be a three new camera SKU holiday lineup, likely to be released with a Hero 5 “basic version.” Originally, the analyst previously anticipated the lineup as just two, now predicting the amplified SKUs “should boost channel fill,” and act as a catalyst for improved elasticity.

While Erickson raises estimates on back of this finding, he reiterates a Sector Weight rating on GPRO without listing a price target, while “waiting to see reception on new cameras and drone before becoming more constructive on the name.”

The analyst holds off on “judgment based on how GoPro’s installed base responds,” but notes Karma does not look promising as, “drone specialty store feedback indicated a relative lack of interest for GoPro’s Karma.”

Recommended Article: Oppenheimer Lifts Estimates for GoPro as Profitability Is Right Around the Corner

“While we expect aggressive channel fill in preparation for the holiday season, we must see consumer reception (for both cameras and the presumptive drone) before we become more positive on the stock. The company’s message of the most connected and convenient GoPro ever is intriguing, but if new hardware and software features fail to attract incremental buyers to the category, we’d have concerns that expectations, particularly for the out year, could be too high,” he concludes.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Brad Erickson is ranked #3,770 out of 4,129 analysts. Erickson has a 51% success rate and faces a loss of 9.3% in his yearly returns.

TipRanks analytics demonstrate GPRO as a Hold. Based on 11 analysts polled in the last 3 months, 2 rate a Buy on GPRO, 7 maintain a Hold, while 2 issue a Sell. The consensus price target stands at $11.43, marking a 23% downside from where the stock is currently trading.Screen Shot 08-30-16 at 09.16 PM

Ambarella Inc

After speaking with 12 specialty drone retailers, Erickson finds Ambarella to be in a stellar position ahead of the holiday season. Management commentary coupled with retailer feedback indicates a holiday surge of new products that leaves Erickson expecting the semiconductor giant will likely close the quarter on top, with an anticipated continuation of revenue and earnings beats, as AMBA has successfully accomplished in its past 13 consecutive quarters.

Believing Ambarella will benefit from major holiday builds and finding the company “has too many things going for it for us not to stick with the name,” Erickson reiterates an Overweight rating, while lifting the price target from $53 to $75, which represents just under a 4% increase from where the shares last closed.

Recommended Article: Stifel Bullish on Ambarella Ahead of 2Q:16

Ultimately, for the analyst, Ambarella remains in his eyes “the highest-quality franchise in HD video processing.” For now, Erickson looks forward to assessing sell-through come holiday season to evaluate whether this rush of momentum can be sustained by the giant.

Erickson concludes, “Positive drone commentary and an additional GoPro SKU for the holiday are promising for AMBA, prompting us to raise estimates and our target to $75 based on 22x F2018 EPS. Holiday sell-through matters more than anything, but with unmatched technology, broad-based secular growth exposure and no exposure to PCs or smartphones, we remain Overweight.”

TipRanks analytics exhibit AMBA as a Buy. Based on 8 analysts polled in the last 3 months, 5 rate a Buy on AMBA, while 3 maintain a Hold. The consensus price target stands at $72.17, marking a slight 0.01% downside from where the stock is currently trading.Screen Shot 08-31-16 at 01.17 PM