Here's Why Wedbush Lowered GoPro's Price Target

Michael Pachter of Wedbush on Friday reiterated an Outperform rating on shares of GoPro Inc GPRO with a price target lowered to $70 from a previous $98 after the company reported its fourth-quarter results on Thursday.

"Perhaps the greatest concern is over the impending lockup expiration," Pachter wrote "We do not expect early-stage investors to liquidate a substantial number of shares. Rather, we expect the holders to sell in an orderly fashion once the share price reaches an acceptable level."

Pachter adds that it "is likely" shares of GoPro will trade lower until a week or two following the mid-February lockup date. The analyst does add that as the company begins to deliver on its guidance, shares are likely to rebound.

Pachter also states that the resignation of the company's COO "does not concern us" despite the departure being a surprise.

Looking forward, Pachter believes that GoPro should meet or exceed the high-end of conservative first quarter 2015 guidance. Also, the analyst believes that earnings per share estimates will rise throughout the year, and that the analyst's fiscal 2015 earnings per share estimate of $1.40 may ultimately prove to be "exceedingly conservative."

Bottom line, Pachter states that as long as GoPro delivers revenue growth, shares will trade at a high earnings per share multiple, but a prior 70x multiple is "not warranted" if growth begins to slow.