Wedbush's Pachter Sees Beat Out Of GoPro; 'Plenty Of Competition, But Only One GoPro'

Wedbush commented on GoPro Inc GPRO Thursday ahead of its Q1 results and maintained an Outperform rating with a $70 price target.

Analysts led by Michael Patcher estimated that revenue would come in at $340 million with EPS of $0.17, versus the consensus of $340 million and $0.18.

“Demand for GoPro products appeared brisk throughout Q1, with the sales ramp in China helping. We do not expect competition to have a material impact on GoPro sales near-term, as alternative products don’t match the value proposition of the entry-level HERO, nor the feature set of the high-end HERO4 products,” according to Patcher.

In addition to strong demand and an appealing value proposition, Patcher noted that GoPro products have unmatched “consumer appeal.” While there was "plenty of competition," there was "but only one GoPro."

Patcher did not “foresee any weakness,” and the conviction was “buttressed by the CFO’s comments on March 4: ‘we feel pretty good about what we guided to.’”

Looking ahead, the analysts expected Q2 guidance to come in above consensus. Wall Street expected revenue of $331 million (down 3 percent q-o-q) and EPS of $0.15 (down 17 percent q-o-q) while Patcher expected “guidance of $350 million or above, as an increasing presence internationally more than offsets any F/X drag,” and EPS of $0.18 for Q2.

The stock may face headwinds for the time being, however.

“We do not expect GoPro shares to appreciate meaningfully until insider sales abate and the company is able to diversify its revenue stream beyond cameras and accessories, placating investor fears about revenue concentration,” Patcher concluded.

The company reports Q1 earnings on April 28.

GoPro Inc closed at $46.20 Thursday, down 0.11 percent.