GoPro's (GPRO) Price Target Raised to $85 at FBN
FBN Securities maintained an Outperform rating on GoPro (NASDAQ: GPRO) and raised its price target to $85.00 (from $80.00). The change follows strong Q2 results. Analyst Shebly Seyrafi noted unit growth, impressive GMs, and strong Asia and China growth.
"The company reported very strong capture unit growth (93% Y/Y) with 1.647M units shipped being 13% above consensus of 1.460M units. Moreover, its GM of 46.4% exceeded the 45% guidance and is still nicely above its LT target of 42-44%. With the company’s recent entry into China, the company’s Asia-Pacific revenue grew by 183% Y/Y and 60% Y/Y to $70M in FQ2 (accounting for 17% of revenue. up from 10% the year before)," said Seyrafi. "We estimate that China is now ~1/3 of Asia-Pacific revenue (so ~6% rev. from zero in December)."
"The concerns in the report – lower capture device ASP, inventory increase, and higher capex – were relatively minor (see below). Although GPRO has diverged a bit from its previous pattern of only releasing new capture devices at the end of the year as it recently launched its HERO+LCD on June 1 and its HERO4 Session (light and small) on July 6, the large R&D% (12.9%) and the large increase in inventory (219M vs. $164M in FQ1 and $117M a year before) suggest that the company is already making plans to launch a HERO5 capture device in FH2 (note that last year it launched its HERO4 on Sept. 29). We think that such a camera may have video encoding at 4kp60 (vs. current 4kp30)," added the analyst.
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Shares of GoPro closed at $62.04 yesterday.