Piper Jaffray Downgrades GoPro (GPRO) to Neutral Following Latest Teen Survey

After the close, Piper Jaffray downgraded GoPro (NASDAQ: GPRO) from Overweight to Neutral with a price target of $25.00 (from $54.00) following their latest teen survey.

Analyst Erinn Murphy commented, "While GPRO shares have been on a roller coaster since April with price action more than reversing from the up 46% gain through early August followed by a 56% correction, we are stepping to the sidelines as we expect near-term volatility to prevail."

She added, "While we believe in the GoPro brand and its ability to engage consumers through the stickiness of its content, we see near-term risk tied to the following: i) consumer demand softening (signaled by Teen Survey); ii) recent pricing reductions that could cause gross margins to normalize (LT plan: 42-44%); and iii) weakening trends in GoPro index on Amazon. Our below-consensus Q4 revenue and EPS are unchanged and our FY16 EPS moves from $1.92 to $1.64. As our near-term growth profile has changed, we are reducing our target multiple from a 28x to 15x. Our 15x multiple is more akin to an established consumer brands in electronics."

The firm's latest teen survey showed a decelarion in holiday wish list activity for GoPro. "What concerns us more is that we found that only 1.0% of teens list GoPro as a top-two gift wish for holiday," the analyst commented. "This is down from 1.6% in Spring and 1.3% in Fall 2014. We believe we are starting to see the tipping point of demand in our survey and against a holiday with no new products likely on deck, prefer to sit on the sidelines."

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

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