Shares of Ambarella (AMBA -0.66%) have soared today, up by 11% as of 3:20 p.m. EST, after a bull on Wall Street increased his price target. Berenberg reiterated its buy rating on the stock and analyst Andy Buscaglia raised his valuation estimate from $87 to $160, which is now the highest on the Street and represents 70% upside from Friday's closing price.
Buscaglia is bullish on Ambarella's ongoing evolution into a pure-play computer vision (CV) specialist, arguing that the company is making progress faster than expected. For that reason, Berenberg is adopting a modified valuation framework for Ambarella, giving it higher valuation multiples to be more comparable to other peer companies that specialize in the technology.
"We think investors are just starting to understand the role CV will play in industrial automation, and many do not yet realize how well AMBA is positioned to benefit," the analyst wrote in a research note to investors. "We would be buyers ahead of sales accelerating and potential design wins over the next twelve months."
Ambarella has not yet scheduled its fiscal fourth-quarter earnings release, but it typically reports in early March. The company's guidance calls for revenue in the range of $56 million to $60 million with an adjusted gross margin of 59% to 61%. The consensus estimate currently sits at $58.1 million in sales, and analysts are modeling for earnings per share of $0.08.