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Analysts warm to GoPro as it narrows 1Q losses on bubbly sales of Hero cameras

The digital camera maker zipped past Street consensus estimate of a loss of $0.38 per share on revenue of US$175.4mln
GoPro camera
Wedbush analysts maintain a cautious take on GoPro’s outlook

Shares in GoPro Inc. (NASDAQ:GPRO), the maker of mountable mini-cameras, could trade higher amid ‘rock-bottom’ sentiment and may well hit an $8 stock price target, according to Paul Coster, a widely-followed JP Morgan analyst, who is keeping a neutral rating on the stock.

Helped by strong sales of its line of Hero cameras, GoPro reported a narrowing of its losses in the first quarter to US$76.3mln, or US$0.55 per share, down from US$218.6mln in the year-ago quarter. On an adjusted basis, GoPro’s loss came to US$0.34 per share, down from US$0.44 per share in the year-ago quarter.

Its revenue of US$202.3mln was boosted by interest in its $199 entry-level Hero camera, which will be sold in Target, Walmart and other retailers starting in the second quarter.

“Initial demand for HERO is promising and we expect it to improve as large retail partners like Target and Walmart begin selling the product in the second quarter," said Nicholas Woodman, GoPro’s chief executive and founder.

GoPro zipped past Wall Street’s consensus estimate of a loss of US$0.38 per share on revenue of US$175.4mln.

Analysts from Wedbush are maintaining a more cautious take on GoPro’s outlook, with a US$6 price target, citing their concerns about its history of poor execution. They are also skeptical about whether GoPro’s pace of innovation will be able to thrive in a crowded market.

“Our bias is slightly more positive after Q1 results and Q2 guidance, so we are taking a less conservative approach to management’s 2018 outlook,” Wedbush analysts wrote. “That said, we continue to harbor concerns that entry-level products will outsell new high-end products at holiday, limiting gross margin expansion.”

GoPro shares rose 2% in early trade to US$5.06.

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