Gopro

Source:GoPro.

Time has a funny way of changing your perspective. It wasn't too long ago that an analyst initiating coverage of GoPro (NASDAQ:GPRO) with a price target of $45 would've been a bearish move. 

The undisputed leader of wearable action cameras peaked at nearly $98.47 last year, and the $45 goal that new Stern Agee CRT analyst Rob Cihra initiated after yesterday's close would suggest that GoPro would be losing roughly half of its value.

However, with the stock continuing to fall apart -- hitting yet another 52-week low yesterday -- $45 is actually a pretty bullish endorsement. The stock has taken a beating since peaking near the triple digits 11 months ago, and surrendering another 8% of its value to close at $29.67. Cihra's price target suggests 52% of upside from here. 

Investing is apparently all about where you draw the starting line.  

GoPro and Ambarella (NASDAQ:AMBA) -- the company that provides the video chips that make GoPro cameras tick -- have gone from market darlings to laggards. 

It's not as if GoPro and Ambarella have stopped growing. Ambarella is coming off a quarter where it posted year-over-year revenue growth of 79%, making it the fifth quarter in a row where top-line growth has accelerated, according to S&P Capital IQ data. GoPro was no slouch, clocking in with a 72% spike in revenue for its latest report. 

The concern these days is naturally more about the future than the past. Ambarella is more than just a coattails play. It's also the provider of video compression and image processing semiconductors for surveillance gear, automotive dashboard recorders, and broadcast infrastructure encoders. It's unique position with some leading brands including GoPro and Dropcam have afforded it the luxury of chunky margins, something that often doesn't last in the volatile chip market.

Ambarella spooked GoPro investors with its report when it warned that revenue for the current quarter would fall short of Wall Street expectations, ending the impressive streak of accelerating growth. The culprit was a forecast for flat revenue in its wearable camera division.

That has always been the fear for GoPro investors. The high-end models aren't cheap, and as smartphones get better about improving their own cameras -- some of the latest devices even shoot 4K video -- do folks really need a wearable camera?

Cihra addresses that concern in his analyst note. He realizes that the history isn't pretty for one-trick ponies that eventually get incorporated into smartphone features. There isn't much of a market for MP3 players or digital still cameras, and even the once-edgy Flip video camera seemed to falter shortly after smartphones hit the mass market. However, Cihra notes that folks don't want to risk destroying their expensive iPhones in wearable environments. There may be plenty of protective cases and enclosures on the market that allow for the safe usage of smartphones in filming extreme sports or outdoor outings, but if you're going to carry around an enclosure, why not just buy a dedicated GoPro?

Do you want to risk dropping your iPhone or Android handset? Speaking of dropping, if Cihra's right, GoPro may have finally bottomed out. 

Rick Munarriz owns shares of Ambarella. The Motley Fool owns and recommends Ambarella and GoPro. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.