Northland Analyst Explains Why Traders Should 'Buy The Dip' At GoPro

GoPro Inc (NASDAQ: GPRO) was down more than 3 percent at $40.24 on Monday after Chinese smartphone company Xiaomi launched a wearable action camera that offers a lot of the features of GoPro's Hero camera.

The new Yi Action Camera retails at $64, half the price of the GoPro Hero, which is sold at $130. Although the camera will first be available in China only, analysts and photo aficionados are already speculating about when it will arrive to the other countries.

Following the drop, Northland Capital Markets recommended buying GoPro's stock. In a report published Monday, analyst Gus Richard reiterated an Outperform rating and $70 price target on the stock, saying that Xiaomi's launch "validates GoPro's business model" and the firm's thesis that "the company's opportunity is significantly larger."

Bottom line, Northland sees the estimates for GoPro as "conservative," and stand as "aggressive buyers" of shares at current levels.

Richard notes that the Xiaomi camera is limited to China for now. While the specs are a "bit better" than the low-end GoPro Hero, and the device costs about half the price, its specs are still "far below" those for GoPro's high-end products.