GoPro's (GPRO) Channel Inventory Nearing All-Time Highs, Says Pacific Crest

Pacific Crest maintained a Sector Weight rating on GoPro (NASDAQ: GPRO). Analyst Brad Erickson said checks showed high levels of channel inventory and below consensus sell-through rates.

"Checks in the U.S. indicate that GoPro days of inventory are again nearing all-time highs, with sell-through down roughly 40% y/y in the United States," said Erickson. "While the drone launch doubles the company's TAM and could support shares in the near term, we still see downside longer term due to action camera softness, with drones likely only gaining modest traction over time."

"Our checks detected days of inventory at roughly three weeks consistently over the past month, and we estimate aggregate sell-through in the United States was down nearly 40% y/y in Q1. Further, we estimate current sell-through run-rates are ranging 800,000 to 1 million units per quarter versus Street expectations of ~1.1 million in Q2 and ~1.2 million to 1.3 million in Q3," continued the analyst.

Erickson added, "Given the weakness of our checks, we are lowering our forward unit and ASP assumptions, partially offset by slightly higher drone assumptions. While the drone launch could drive some continued optimism in the name, ultimately, our downside bias on the name remains due to the softness we're seeing in the action camera business."

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 $13.98 yesterday.

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