FBN Securities downgraded GoPro (NASDAQ: GPRO) from Outperform to Sector Perform with a price target of $11.00 (from $30.00). The change follows release of disappointing preliminary results. Analyst Shebly Seyrafi pointed out low visibility, a lack of near-term catalysts, and drone risk.

"We had expressed that the company made a mistake in not introducing a HERO5 in C2015, and after the large share price decline throughout the year we were willing to give the company a pass on slightly weak results in FQ4 as we had expected (and still expect) the company to benefit from a strong HERO5 cycle later in 2016 due to there being roughly two-years of pent-up demand. However, following the negative preannouncement last night, we can no longer maintain a positive view on the stock and move to the sidelines," said Seyrafi.

"We now estimate that GPRO’s FQ4 NG EPS will be breakeven, but this includes price protection and other one-time charges (see below) without which we estimate that NG EPS would have been $.23 (still 32% below consensus of $.34). GPRO also announced that it is reducing its headcount by ~7%, which suggests to us that our concerns about slower growth will be ongoing. Bears need to watch out for the possibility of GPRO (at lower stock prices) becoming an M&A target for companies such as AAPL, and this possibility could start to put some floor on the stock. GPRO’s FQ4 results are incrementally negative for AMBA as well as we are reducing our capture unit estimates for GPRO by 9% (from 2.07M units to 1.85M units) in FQ4, but AMBA has offsetting positives in drones, security, and automotive," added the analytical.

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Shares of GoPro closed at $14.61 yesterday.