US Drone Market Could Reach 6 Million By 2019 - Oppenheimer

Oppenheimer analysts have a bullish outlook on the drone market and they likely have good reason as they cite the wonderful aerial footage that can be captured with a drone. Analyst Andrew Uerkwitz wrote to clients early Wednesday commenting "We've been flying consumer drones for some time now and believe a worthwhile exercise is to use that experience to estimate the size of the consumer drone market by 2019. To do so, we also looked back at previous commentary regarding action camera and the DSLR markets. We believe one can draw parallels from each and conclude that by 2019, the consumer drone market will be about 6M units. Each saw improved interface and lower price drive broader adoption (from hobbyist to consumer). And this technology shift is happening rapidly in the drone market. For perspective, the DSLR market peaked at about 15M while we estimate the action camera market did the same at about 11M units. We aren't calling a peak for drones yet as the technology and regulations continue to evolve, but we are comfortable in making an argument for strong unit growth over the next several years."

The team shared an image showing the decline in Compact Camera use and the expected growth in DSLR and POV Camcorders:

Uerkwitz lays down four compelling points to ponder when attempting to extrapolate the potential size of the drone market:

1. Aerial footage is compelling
2. DSLR and action cameras make good precedents
3. Action camera market is smaller than the DSLR market
4. Consumer drone market is smaller than the action camera market

Public companies exposed to the drone market are:

• Ambarella (NASDAQ: AMBA)
• GoPro (NASDQ: GPRO)
• Invensense (NYSE: INVN)
• Ceva (NASDAQ: CEVA)
• Qualcomm (NASDAQ: QCOM)
• Intel (NASDAQ: INTC)

Just look at the following video they shot in New York (YouTube)

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