GoPro's Xiaomi Threat: Oppenheimer, Northland And Morgan Stanley Analysts Weigh In
Shares of action camera company, GoPro Inc (NASDAQ: GPRO), tumbled down 5 percent in trading on Monday, March 2 after Chinese smartphone company, Xiaomi, launched a similar product called the Yi Action Camera.
The Yi Action Camera has a 16-megapixel camera and can record high-definition videos at 60 frames per second, whereas the GoPro Hero only has a 5-megapixel camera and records high-definition videos at just 30 frames per second. In addition, the Yi Action Camera supposedly comes with more storage and weighs less than the GoPro Hero. While the low-tier GoPro Hero retails around $130, the Yi Action Camera costs about half the price at $64, or 399 yuan.
However, the Yi Action Camera is currently only sold in China and does not have any plans to expand sales internationally. Despite this, GoPro investors are more worried that this will hinder the company's sales strategy in Asia.
Following the drop in GoPro's shares, Northland Securities analyst Gus Richard reiterated an Outperform rating on the stock with a price target of $70 on March 2 saying that Xiaomi's launch of the Yi Action Camera further "validates GoPro's business model" and the firm's opinion that "the company's opportunity is significantly larger." Overall, Richard believes GoPro's estimates are rather "conservative," and validates his firm as "aggressive buyers" of shares at current levels. The analyst also points out that while the Yi Action Camera's features are a "bit better" than the entry level GoPro Hero, it is still "far below" the higher-end GoPro products.
Overall, Gus Richard has a 76 percent success rate recommending stocks and a +13.4 percent average return per recommendation. However, the analyst has rated GoPro twice since February 2015 with no success and a -17.5 percent average loss per GoPro recommendation.
On the other hand, Oppenheimer analyst Andrew Uerkwitz maintained an Underperform rating on GoPro with a price target of $35 on March 2 after the stock declined the same day. The analyst noted, "We reiterate our view that aggressive competitors such as Xiaomi will materially reduce GoPro's market opportunity in China and Asia." However, Uerkwitz believes the Yi Action Camera "does not pose a threat to GoPro's US and EU markets" because "in typical Xiaomi style… the camera will be in very short supply in the near term." The analyst concluded, "We believe Yi Action Camera and its likes will prevent GoPro from getting material market share in general consumer market in China. Going forward, we believe GPRO's market will be confined to extreme sports enthusiasts in China."
Andrew Uerkwitz currently has an overall success rate of 53 percent recommending stocks and a +2.4 percent average return per recommendation. He has rated GoPro 6 times since October 2014, earning a 100% success rate recommending the company and a +34.0 percent average return per GoPro recommendation.
On February 27, a few days before the launch of Xiaomi's action camera, Morgan Stanley analyst James Faucette initiated an Equal-Weight rating on GoPro with a $57 price target, citing that the company has to come out ahead of the big competitors in order to keep growing. He noted, "If GoPro is the one who successfully brings that to market, then you have a lot of upside."
James Faucette has an overall success rate of 73 percent recommending stocks and a +15.5 percent average return per recommendation. He has only given GoPro 6 Neutral ratings since December 2014, earning no success rate or average return on the stock.
On average, the top analyst consensus for GoPro on TipRanks is Hold.
Latest Ratings for GPRO
|Sep 2016||Bank of America||Initiates Coverage on||Buy|
|Jun 2016||Longbow Research||Initiates Coverage on||Neutral|
|Feb 2016||Morgan Stanley||Maintains||Underweight|
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