GoPro (GPRO) Estimates and Price Target Slashed at Northland Capital
Northland Capital Markets analyst, Gus Richard, slashed his PT on GoPro (NASDAQ: GPRO) nearly in half to $20 from $39 but left his Outperform rating on the stock.
GPRO preannounced revenues of $435M versus Q4 guidance of $500M-$550M. Roughly $21M of the miss was from price protection of its HERO 4 Session. GoPro cited weak sell through at retail, likely related to weak sales of the HERO 4 Session as GoPro had to lower the price a second time to help move product. Some of weakness was likely due to the drone makers using non GoPro cameras.
GoPro also announced a 7% layoff or roughly 100 employees. We believe that the layoffs will slow opex growth in CY16, but the restructuring is likely not large enough to cut opex growth on a Y/Y basis in CY16.
The analyst does not believe GoPro is likely to cut any of its product initiatives that include the Quadcopter, GoPro Entertainment, the new cloud based software, or new cameras. GoPro will need to execute on these new products in order to drive growth but new product is unlikely to impact the company's revenue in 1H:16, making a very rough start to the year.
Q4 estimates drop from $0.41 on $525M to $0.06 on $435M. For CY16 estimates go from $1.16 on $1.97B to $0.91 on $1.425B.
The new price target of $20 is based on 20x CY17 estimate of $1.00.
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 $14.61 yesterday.