This Analyst Sees GoPro At $15 Despite 'Humiliating' Quarter

• GoPro Inc (NASDAQ: GPRO) shares have declined 85.33 percent over the past six months, almost down to their 52-week low.
• Northland Capital’s Gus Richard has maintained an Outperform rating on the company, while lowering the price target from $20 to $15.
• Richards believes that the company reported a “humiliating quarter” with revenues below the initial guidance, declining 31 percent year-on-year, and gross margin significantly below the initial guidance.

Analyst Gus Richards mentioned, “GPRO continues to invest heavily in new products, while excess channel inventory impacts 1H revenue. Our estimates are now below guidance as we are becoming more skeptical of GPRO’s ability to expand its user base.”

According to the Northland Capital report, “GPRO decided to end-of-life the entry level HERO, HERO Plus, and HERO Plus LCD products and took a $57M charge in Q4, without this charge GM would have been roughly 3 percent.”

Related Link: Morgan Stanley Is Waiting On GoPro To Development Some New Software

The company was also unable to effectively control its non-GAAP opex, while providing weak guidance due to excess inventory in the channel. Cash on the balance sheet feel by $39 million, while cash per share was down $3.46, quarter on quarter.

Although GoPro expects to launch its drone in the market during 1H, Richards said that the company was late to the market “with a large number of companies showing off their drones at CES at price points from $500 to $20K.”

The company intends to launch GoPro for Desktop, its new content management application, in March, and Richards noted that for GoPro to expand its market opportunity, it would need to improve the user experience.