JPMorgan Downgrades GoPro (GPRO) to Neutral; Opportunity in Law Enforcement 'Modest'

(Updated - September 4, 2014 9:46 AM EDT)

JPMorgan downgraded GoPro (NASDAQ: GPRO) from Overweight to Neutral with a price target of $51.00 (unchanged). Analyst Paul Coster is cautious on valuation. However, he is not recommending investors sell the stock, just not add to positions. Interesting, Coster said GoPro's opportunity in law enforcement -- a hot topic on the Street -- is "quite modest," citing comments from GoPro's CFO.

"We are downgrading GPRO to Neutral on valuation. No change to our estimates, nor to our Price Target, and we believe fundamentals remain very good for this company. GPRO stock is up 137% from its IPO price of $24 on June 25th (S&P500 up 3%) and has traded through our Price Target and we do not recommend adding to positions here. That said, nor do we want our clients to sell the stock, especially with the possibility that the company launches new capture device products ahead of the holiday season; risks to the upside and downside seem balanced here," said Coster.

Commenting on what has been moving the stock, the analyst added, "Recent commentary from Chicony (contract manufacturer) and Ambarella (video processing solution) suggest that GPRO could post strong growth heading into the holiday season, but in our view their comments fall short of proving that GPRO is launching a new generation of capture devices in coming weeks, so for the timebeing some caution might be warranted. Of course Ambarella results tonight might change our view, quickly.. Separately, GPRO may have traded up with TASR and DGLY as a result of growing calls for use of cameras to improve law enforcement procedures, but we think GPRO's opportunity quite modest in this context, at least based on our conversation with the CFO yesterday."

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 $56.86 yesterday.

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