What: Shares of Ambarella (NASDAQ:AMBA) were up more than 13% as of 3:00 p.m. Tuesday on the heels of a positive analyst initiation.

So what: For perspective, Ambarella stock has been hammered over the past two months, first after the video chip maker offered disappointing guidance along with its strong third-quarter report in September, then last week on concerns over the possible negative implications of light guidance from prominent customer GoPro (NASDAQ:GPRO).

But on Monday, shares of Ambarella closed up around 5% after analysts at FBN Securities initiated coverage with an "outperform" rating and a $70-per-share price target -- a more than 20% premium to Ambarella's trading price as of this writing. Today's move appears to be at least in part driven by a continuation of that momentum.

Now what: As I noted after each of the aforementioned declines, investors would be wise to remember that while GoPro does represent a significant chunk of Ambarella's sales through the wearable camera segment, the latter is also continuing to work hard to expand its reach with solid growth and design win traction in other markets including IP security, automotive, and drones/flying cameras. And keeping in mind Ambarella management largely blamed its guidance in September not on actual product demand but rather on earlier-than-usual timing of product launches in wearables, it seems fair to say this near-term plunge might well be overblown relative to Ambarella's long-term potential. 

With Ambarella stock still down nearly 50% over the past three months, I think now's a great time for patient investors to step in.

Steve Symington has no position in any stocks mentioned. The Motley Fool owns shares of 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.