GoPro Shares Have Hit Near-Term Bottom: Oppenheimer

Oppenheimer’s Andrew Uerkwitz believes GoPro Inc (NASDAQ: GPRO) shares have “established their near-term bottom following the impact of a weak product cycle in 2015 and ensuing channel inventory issues.” Uerkwitz reiterated a Perform rating and $43 price target on the action-camera maker.

Stock Could Outperform

Over the next three months, the analyst expects investor sentiment to improve, which along with major product launches, are likely to offer adequate tailwind for the stock to outperform its peers in the next earnings season.

“We see improving supply chain data points to support near-term improvement in GoPro inventory pressure,” Uerkwitz mentioned.

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Challenges

GoPro is scheduled to release new cameras in the fall, which have been long overdue for updates. However, the analyst believes the structural decline in the camera market would be difficult to overcome unless the company continues to make significant improvements in user experience.

According to the Oppenheimer report, “Comparing to the same time last year, GoPro is well positioned to deliver better consumer experience with its acquisition of two leading mobile editing apps, Splice and Replay. Those apps can reduce friction in user experience to allow videos to be edited and shared on mobile devices.”

Uerkwitz also expects the camera drone market to see intense price competition from more experienced Chinese competitors.

In addition, the analyst believes GoPro might be close to clearing its channel inventory, and that investor sentiment would improve with the clearing of channel inventory and the new camera and drone products to be release in the fall.

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