GoPro (GPRO) Drone and VR Expansion Kills the Bear Thesis, Piper Jaffray Says

Piper Jaffray analyst Erinn Murphy reiterated an Overweight rating and $66 price target on GoPro (NASDAQ: GPRO) after CEO Nick Woodman made comments at the Code Conference yesterday regarding product extension plans into the Drone and VR markets.

"We believe the entrance of GoPro into the drone and VR markets could begin to mitigate bear arguments of a small TAM opportunity for GoPro," Murphy commented. "Bears have pointed to the 14M unit (2013) and declining video camera market as a ceiling for the company, which shipped 5.2M units in 2014. We believe the TAM for all camcorders & digital cameras at 80-90M units is a better starting point for TAM but it could extend significantly beyond this as new products come to market. Two key new markets are drones and VR, which we estimate to be >$5B by 2020 and >$65B by 2025, respectively."

The analyst notes consumer drone leader DJI is valued at ~10x revenues. "Based on our research and an April 14 Forbes report consumer drone leader DJI could be worth $8B-$10B based on advanced stage funding discussions. Frost & Sullivan estimates DJI controls 70% of the consumer drone market today and the company shipped ~400k units in 2014. For 2014, DJI sales are estimated at $500M ($130M in 2013) and Forbes reported those could double to $1,000M in 2015--implying a 8x-10x FTM revenue multiple vs. the 3.3x GPRO trades at today and its 8.2x peak."

Murphy also noted this morning in ccomments presented at a peer TMT conference in NYC (Cowen), GPRO continues to suggest the TAM is significantly larger than just looking at the 80M-90M unit camcorder and digital camera market as it is creating a category that is allowing consumers to capture and share content.

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 $53.28 yesterday.

You May Also Be Interested In

• Morgan Stanley Double Downgrades AU Optronics (2409:TT) (AUO) to Underweight
• Jefferies Upgrades Medpace (MEDP) to Buy, 'Big Margin Improvements'
• L'Oreal SA (OR:FP) (LRLCY) PT Raised to EUR420 at HSBC