Ambarella is scheduled to release its next earnings report on Thursday, and shares tumbled today following a price target cut from analysts at Deutsche Bank. However, not all firms are so bearish on the company. Some investors may be concerned that Ambarella gets so much of its revenue from GoPro, which is beginning to struggle, but Stifel analysts think it’s time to disconnect the two stocks.

You may remember that Ambarella released weak guidance in September ahead of this week’s earnings report.

Ambarella

Ambarella price target to $70

Deutsche Bank analyst Ross Seymore and his team have maintained their Hold rating and slashed their price target for Ambarella from $85 to $70 per share based on their channel checks of GoPro products. They expect Thursday’s report to indicate results that are in line with expectations and notes that Ambarella’s non-GoPro business is doing well. However, despite the strength in non-GoPro areas, he estimates that GoPro still makes up about 35% of its total sales.

Seymore expects earnings of 89 cents per share and revenue of $92 million for the third fiscal quarter of 2016. Wall Street is expecting earnings of 86 cents per share and revenue of $90 million. He expects Ambarella’s results to be in line because he thinks the weakness from GoPro was already being factored in as the camera maker’s shipments declined 3% sequentially to 1.6 million units. He noted that Ambarella management has guided conservatively in nine of the last ten quarters.

Will Ambarella finally move apart from GoPro?

Stifel analyst Kevin Cassidy, on the other hand, has a Buy rating and $115 per share price target on Ambarella going into Thursday’s report. He noted that Ambarella management already included year over year and quarter over quarter declines in the Sports Camera (GoPro) category but a 40% year over year growth in total revenue, which includes IP Security, Drones, Wearable Cameras, and Automotive.

Cassidy is expecting earnings of 88 cents per share for the third quarter. Looking into the fourth quarter, he expects a 28% sequential decline in revenue from the Sports Camera category. His non-GAAP earnings per share estimate of 55 cents per share is below consensus estimates because his estimate for gross margin is 62%, or one percentage point lower than the consensus.

Looking to 2017

The Stifel analyst expects fiscal 2017 to bring strong growth for Ambarella, as he’s projecting a 25% increase in revenue for the year. He believes consumer home surveillance cameras, wearables, drones, and automotive cameras will drive growth.

He also noted that Ambarella has been investing in its 14-nanometer video processors, which are the next generation. He believes that they will push the company further ahead of the competition in terms of features, energy efficiency, and performance and believes management will share more about these processors at the Consumer Electronics Show next month.

Options strategy for Ambarella

Cassidy’s colleague Brian Donlin at Stifel recommends a call spread options strategy on Ambarella around Thursday’s earnings report. He said options imply that the stock will move by about 10.35%, and the average one-day absolute price change after the company’s earnings reports have been at around 5.13% since the third quarter of fiscal 2013. Over the last eight quarters, he adds that the average one-day absolute move after the earnings report has been 4.44%.

Donlin’s suggestion is the Dec. 4 62/67 call spread at $1.40, which may help investors benefit from the projected stock price move.