Goldman Removes GoPro From Sell List Ahead Of Product Launch

Analysts at Goldman Sachs no longer hold a bearish view on GoPro Inc GPRO as the upcoming launch of its HERO6 camera could prove to be a catalyst for the stock. The firm's Doug Clark upgrades GoPro's stock from Sell to Neutral with a price target boosted from $6.75 to $10. From a historical standpoint the launch of a new camera has been a positive catalyst as GoPro's stock outperformed the S&P 500 index into and out of product launches, Clark argued. But this time around, the company will follow up with its 360-degree Fusion camera into 2018 and will also enter the high-end AR/VR device capture market. Nevertheless, the analyst isn't ready to declare GoPro's stock an outright buy as the challenges the company faced in the past remain in place. Specifically, camera sell-through was down 9 percent year-over-year in the second quarter and likely declined in five of the past six quarters — which implies it is operating in a saturated market that is also stiff in competition. Related Links: 25 Stocks Moving In Tuesday's Pre-Market Session A Peek Into The Markets: U.S. Stock Futures Up Ahead Of Earnings, Economic Data

On the other hand, GoPro should return to cash generation in the back half of 2017, which represents another reason to no longer hold a bearish stance.

Finally, a $10 price target is based on a 1.0x multiple on 2018 sales, which is up from a prior estimate of 0.6x. The revised multiple is based on GoPro's improved costs and margins and balance sheet stability.