GoPro Faces Significant Headwinds, But Oppenheimer Turning More Positive

Taking a more positive view on GoPro Inc GPRO, Oppenheimer raised its 2016 and 2017 earnings per share estimate for the company. The firm sees the camera maker beating estimates and raising guidance heading into the holiday season and early 2017, premised on its new flagship camera launch, leaner channel inventory and updated software platform.

That said, the firm's technology analyst Andrew Uerkwitz expects hurdles, as the company seeks to achieve sustainable profitability. Beyond the action camera, the analysts sees potential for drones, although the prospects will be rendered muted by competition. The analyst models drone unit sales of 50,000 for 2016 and 120,000 for 2017.

Related Link: GoPro Shares Have Hit Near-Term Bottom

The firm believes the company should be generating annual revenues of $1.9 billion in order to break-even at the operating level on an GAAP basis. In 2015, the company's revenues stood at $1.62 billion, up about 16 percent year-over-year. This is achievable only when action camera sales surge and/or if it is managing successful expansion beyond drones, the firm said.

As such, Oppenheimer raised its 2016 revenue estimate to $1.42 billion from $1.35 billion and its loss per share estimate to $1.15 from $1.32. Additionally, the 2017 revenue estimate was lifted to $1.64 billion from $1.45 billion and the loss per share estimate to $0.67 from $1.49. The firm's estimates pitch 2016 camera unit sales at 5 million and 2017 sales at 5.6 million.

The positive setting into the second half of 2016, according to the analyst, presents trading opportunities, although it doesn't alter its long-term view. Oppenheimer has a Perform rating on shares.