GoPro (GPRO) Drone Shipment Estimates Raised At Pacific Crest

Pacific Crest maintains Sector Weight on GoPro (NASDAQ: GPRO). Sees fair value between $9 and $10 per share.

Analyst Brad Erickson is raising his estimates for GoPro's drone shipments to 150,000 which will drive a revenue contribution of $88 million for FY 2017. He also believes there will likely be losses and cash being burned in 2017 but notes that management could make further head count reductions to hedge against the gap.

To wit: "In light of better-than-feared sell-through, we are raising our unit estimates by a bit more than 10% to 2.1 million units in Q4 from 1.9 million and are raising our ASP estimate slightly as our store checks showed an impressive ability to pivot point-of-purchase displays to selling the Karma Grip ($300 electronic stabilizer) when it became clear the Karma would not be launched. Further, we are removing Karma from our Q4 estimates and now expect volume shipments to begin in 2Q17. For 2017, we expect 150,000 drone shipments to contribute $88 million in revenue."

Furthermore Erickson says holiday demand was not as bad as everyone assumed it would be, commenting "Our checks indicate that GoPro exited the quarter with a healthy 7-8 days of inventory at Best Buy in the United States with sell-through having sustained periods of significant growth through the quarter. One quarter does not make a trend, and regarding the return to growth, we note that GoPro was lapping an abysmal 4Q15 when sell-through was 40%-50% below ship-in. However, for those harboring hopes of a turnaround, it is a start."

For an analyst ratings summary and ratings history on GoPro click here. For more ratings news on GoPro click here.

Shares of GoPro closed at $9.40 yesterday.

You May Also Be Interested In

• GoPro Adds Eight Young 'Stars of Tomorrow' to its Professional Athlete Team
• BMO Capital Reiterates Outperform Rating on Beam Therapeutics Inc (BEAM)
• Citi Downgrades UBS AG (UBSG:SW) (UBS) to Neutral