Analyst Slashes GoPro Price Target In Half To $35

• Shares of GoPro Inc (NASDAQ: GPRO) were trading lower by 2 percent in Wednesday's pre-market session following a bearish note by James Faucette of Morgan Stanley.
• Faucette maintained an Equal-weight rating on GoPro with a price target slashed to $35 from a previous $62.
• Faucette noted mix feedback on the HERO4 Session, software improvements not coming fast enough and overall little differentiation from smartphone cameras.

According to Faucette's checks, the HERO4 Session has seen mixed feedback as customers prefer the Silver's LCD screen and superior video quality over the Session's smaller form factor. In addition, commentary by the company's management confirm that Session has been a "difficult sell." The analyst added that the "disappointing" demand led to the company reducing the price of its camera to $299 from $399.

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Faucette said GoPro's recent editing and sharing feature improvements are "steps in the right direction" but still fall short of already available features in other video editing apps on Android and iOS devices. As such, GoPro devices will "remain a niche alternative" to smartphone videos and the company's overall growth will slow down and fall in-line with the broader digital camera market.

Finally, Faucette stated that GoPro's opportunities to monetize media and software are "unlikely to move the needle" compared to its device business. The analyst also noted that media and software monetization will likely be "small" over the next few years.

Bottom line, Faucette revised his revenue estimates lower to reflect the price cuts and a "less optimistic" view on 2016. The analyst's third quarter and full year fiscal 2015 revenue and earnings per share estimates are now $424 million/$0.21 and $1.9 billion/$1.39 (from $444 million/$0.31 and $2.0 billion/$1.80).