2 Ex GoPro Inc Bulls Downgrade Stock: Now A Broken Stock And A Broken Company?
Some on Wall Street appear to agree.
On Thursday morning, analysts at Dougherty & Co and Sterne Agee CRT downgraded the stock to Neutral.
"We expected bad GoPro forecasts, but what we got was worse than feared. Our estimates are coming down considerably," wrote Dougherty's Charles Anderson. The firm doesn't hold a price target on the stock, but expressed concern that GoPro management believes it can "spend [its] way out of this and resuscitate the brand and the products" -- a strategy GoPro has never conducted in its history.
Rather than acknowledging increased competition or lower categorical demand, Anderson added, GoPro is increasing R&D spending, boosting marketing efforts and pushing the lower cost $199 Session camera. While the strategy has yet to be disproven, Anderson explained that any real upside to the stock exists in its next products: The Quadcopter and the Hero5 camera.
"GoPro needs to build a better quadcopter than DJI if it wants to gain mindshare," he concluded.
Sterne Agee CRT's Rob Cihra, meanwhile, said that while the timing for a downgrade might seem "silly," an increase in operating expenditures "practically resets" GoPro to a venture investment. Cihra had previously expected full year 2016 earnings of $0.80 per share, but now forecasts a loss of $0.81 per share.
The market for GoPro products is still "ripe," the analyst added, but his price target of $10 implies little upside from current prices.
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|
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.