Wedbush Cuts Price Target on GoPro (GPRO) Following Negative 4Q Pre-Announcement
Wedbush maintained an Outperform rating on GoPro (NASDAQ: GPRO), and cut the price target to $18.00 (from $33.00), following the company's negative 4Q pre-announcement. Q4 revenue is expected to be roughly $435 million, well below the guidance range of $500 – 550 million, and consensus of $512 million. The HERO4 Session has been a problem since its launch in early July. Its starting price of $399.99 was cut to $299.99 in late September, and roughly one month later, GoPro announced worse-than-expected Q3 results.
Analyst Michael Pachter commented, "After the close on Wednesday, GoPro pre-announced worse-than-expected preliminary Q4:15 results driven by weak sell-through for its capture devices. Q4 revenue is expected to be roughly $435 million, well below our prior estimate of $550 million, the guidance range of $500 – 550 million, and consensus of $512 million. Q4 revenue includes a $21 million reduction for price protection charges from the December HERO4 Session price cut. Q4 non-GAAP gross margin is expected to be 34.5 – 35.5%, below our prior estimate of 46.6% and 48.0% in Q4:14. Excluding the impact of price protection and a $30 – 35 million charge to cost of revenue, Q4 non-GAAP gross margin would be 44.5 – 45.5%. Q4 nonGAAP operating expenses are expected to be $150.0 – 152.5 million. Cash, cash equivalents, and marketable securities at YE were roughly $475 million."
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Shares of GoPro closed at $14.61 yesterday.