Skip to main content

Market Overview

Morgan Stanley Remains GoPro Bear; Wedbush Says It Could Turn Bullish Soon

Share:
Morgan Stanley Remains GoPro Bear; Wedbush Says It Could Turn Bullish Soon

Action camera maker GoPro Inc (NASDAQ: GPRO) reported second-quarter results Thursday that fell short of estimates, but the company guided to a better outlook for the rest of the year.

The Analysts

Morgan Stanley's Erik Woodring maintained an Underweight rating on GoPro with an unchanged $5 price target.

Wedbush's Michael Pachter maintained a Neutral rating with a price target lowered from $6 to $5.50.

Improved Outlook, But Bearish Stance

GoPro's second-quarter EPS and revenue fell slightly short of expectations, but this was offset by management's revised outlook for the back half of 2019, Morgan Stanley's Woodring said in a Friday note.

The camera maker lifted its second-half revenue guidance higher from 4-9% growth to 8-12.5% growth due to healthy demand for the Hero7 and a more optimistic outlook for a fall product launch, the analyst said. 

GoPro's inventory is estimated to be near a three-year low and shouldn't experience any significant channel inventory glut, Woodring said, adding that the company's revised year-end targets look achievable. 

Morgan Stanley's bearish stance on GoPro remains unchanged, as the pace of improvements to the company's core camera could disappoint — and future product launches might not live up to expectations, Woodring said.

If GoPro overcharges for incremental product feature improvements, then 2020 estimates — which call for expanding revenue, margins and earnings — will be at risk, the analyst said. 

Wedbush: Premium Valuation Unwarranted 

GoPro's second-quarter report signals the company's profitability turnaround is "well underway" and marks a reversal from the poor execution years of 2016 and 2017, Pachter said in a Friday note.

The company deserves credit for "re-focusing" on its core action camera and making it clear it will not release a new drone, the analyst said. 

Exiting Thursday's report, it is unclear if GoPro will be able to show sustainable growth, and investors should consider avoiding buying GoPro's stock until management shows it can operate as a growth company again, he said. 

A bullish stance may be justified ahead of a new product cycle launch, but until then a premium valuation is unwarranted, Pachter said. 

The research firm's revised $5.50 price target is based on an unchanged multiple of 12 times on a revised 2020 EPS estimate of 45 cents.

Price Action

GoPro shares were down 13.92% at $4.33 at the time of publication Friday. 

Related Links:

Longbow Says GoPro Should Have A 'Positive' Q1

Analysts See Blurry Longterm Picture For GoPro Despite Profitable Quarter

Latest Ratings for GPRO

DateFirmActionFromTo
Feb 2022JefferiesInitiates Coverage OnBuy
Dec 2021WedbushUpgradesNeutralOutperform
Nov 2021JP MorganUpgradesNeutralOverweight

View More Analyst Ratings for GPRO

View the Latest Analyst Ratings

 

Related Articles (GPRO)

View Comments and Join the Discussion!

Posted-In: Erik WoodringAnalyst Color Earnings News Guidance Price Target Reiteration Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
SEDGB of A SecuritiesMaintains411.0
PTLOPiper SandlerMaintains28.0
AOUTLake StreetMaintains26.0
RAPTPiper SandlerMaintains52.0
OCXLake StreetMaintains6.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com