Piper’s Analyst Brought Down GoPro’s Price Target

GoPro stock, declining sales, year end inventory, new product line

Analysts have anticipated the stock price to decline farther.

Erin Murphy, an analyst at Piper Jaffray has brought down the price target of GoPro stock from $9.00 to $7.50. Over the period of last six months, the action camera maker company’s stock had declined nearly 82%. The hard blow on the stock price is due to company’s unsatisfactory sales of its popular Hero product line.

After the launch of Hero 4 Session, the sales hit a new low. The new product was launched in July and contrary to the expectations of the organization the demand for the product never got high. The management slashed down the price of the product but they cannot save the sinking ship. Moreover, the economic crunch in China slowed down the progress of the company in Asian overseas market. Poor production number brought down the stock at $10, earlier in last month.

After witnessing company’s below average performance, the investors got miffed. They blamed the company for keeping them in the dark regarding the low demand of the flagship product. Further, they accused the company for not valuing its guidance in the fourth fiscal quarter. For its fourth quarter, the company’s guidance range was $500 million -$550 million however, it announced that the company announced that the fourth quarter expected revenue will be around $435 million. GoPro is scheduled to declare its earnings on Wednesday, February 3,2016.

The investors and analysts look forward for the results of company’s first quarter 2016. Jeremy David, an analyst at Citigroup anticipates the revenue to be around $230 million -$250 million. He has also termed the analysts’ revenue expectation of $297 million as “too optimistic.” David’s projections are rational as the company is having hard time in selling its product and its inventory has also been declining throughout the year. For now, Citigroup has given “Neutral” rating to the stock and it has set the price target at $12.

Similarly, Erin Murphy also thinks that for the first quarter, the company’s revenue will be around $272 million. She has given an “underweight” rating to the stock.

On Wednesday, GoPro will release its earnings. Investors and analysts are not looking out for revenue figures anymore however the analysts are intrigued to find out about the company’s inventory position at year-end –to justify the revenue expectations and the proposed plans of launching new products.

The future is likely to tell about how much will GoPro’s partnerships with NHL for producing a series based on the lifestyle of the sport stars and Twitter’s Periscope –to let the users live stream –be beneficial for the struggling company.

 

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