Piper Jaffray analyst Erinn Murphy weighed in today with a few insights on GoPro Inc (NASDAQ:GPRO), after Ambarella Inc (NASDAQ:AMBA), the key supplier of video compression and image processing semiconductors used in GoPro’s HERO capture devices, reported its very positive first quarter earnings. The analyst slightly raised the price target to $68 (from $66), while reiterating an Overweight rating on the stock.
Murphy commented: “We remain positive on GPRO shares following Ambarella’s (AMBA) Q1 report yesterday afternoon in which revenue bested the Street and was guided well above consensus for Q2.” Furthermore, “We are positive on GoPro’s new $300 HERO+ LCD that fits nicely in the middle of the company’s offering. We have raised our estimates and are lifting our price target.”
“While our Q2 forecast remains unchanged and in line with the Street at $0.26 in EPS, we see significant upside. Recall, GoPro revenue has a 0.92 correlation to Ambarella revenue on a onequarter lag. As such, we see potential for Q2 revenue to be in the $440M-$460M range vs. our $396M and note every $25M in incremental revenue yields $0.02-$0.03 in EPS.” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Erinn Murphy has a total average return of 1.8% and a 50.7% success rate. Murphy has an 17.6% average return when recommending GPRO, and is ranked #1766 out of 3610 analysts.