Cowen Cuts GoPro Rating, Sees Uncertain Growth

• The share price of GoPro Inc (NASDAQ: GPRO) has declined 61.14 percent year-to-date, touching a low of $27.60 on October 8.
• Robert W. Stone of Cowen and Company has downgraded the rating on the company from Outperform to Market Perform, while lowering the price target from $60 to $24.
• Stone believes that GoPro’s uncertain growth prospects could adversely impact the stock performance. The company also reported weak Q3 results, while the Q4 guidance missed expectations.

Analyst Robert Stone mentioned that GoPro reported its 3Q15 EPS 14 percent below the consensus expectations, on an 8 percent decline in sales, which in turn was driven by the weak Session model launch.

Related Link: JMP's Alex Gauna: GoPro Will Still Outperform, But Is Worth $90 Now

GoPro's Q4 sales guidance implies a 17 percent year-on-year decline, significantly below the consensus expectations of 9 percent growth, while the EPS is down more than 50 percent.

According to the Cowen report, “Channel inventory was apparently much leaner entering Q4:14. Weaker Q3 category sales and underperformance of the Session launch caused inventory on the balance sheet to rise from ~88 days in Q2 to 122 in Q3.”

Stone expects the inventory overhand and tough comps to impact sales growth in Q4, although higher spending, “including TV ads, may help spur demand, and software, drones, and content monetization remain on the "to do" list.”

The sales and EPS estimates for 2015-2019 have been reduced.

Shares were down 15.8 percent at $25.47 on Thursday morning.