GoPro Embarks On A New Adventure, Oppenheimer Says In Upgrade

At least one analyst has taken a bullish stance on GoPro Inc. GPRO since the announcement of a refocused strategy and new product development.

The Analysts

Oppenheimer's Andrew Uerkwitz upgraded GoPro from Perform to Outperform with a $9 price target.

The Thesis

After assessing the new product line, Uerkwitz remains confident in the company’s forthcoming success, considering the past several difficult years, noting that "GoPro management has implemented a strategy to reset the company.”

“OpEx is down nearly 50% from peak, product has been refocused on what has worked (no drones, no media, no sessions), and new features focus on ease-of-use (auto-editing software, image stabilization, smart HDR mode)," he said in a note.

Bloated available product amount in the past directly resulted in inconsistent prices, mixed advertising and confused consumers, Uerkwitz said. To offset this issue, the company has since cleared channel space, resulting in four-year low.

According to company projections, sell-through by the end of 2018 is expected to be roughly 5 million units, while sell-in is expected at 4.2 million units. Once the clean channel and inventory replenishment fully concludes, GoPro should return to growth in 2019, Uerkwitz said.

“Aside from the technical set-up, this year's products are quite compelling ... we believe we could see a stronger than usual replacement cycle.”

Price Action

GoPro shares were up 4.4 percent to $6.91 at time of publication Wednesday. The stock hit an intra-day high of $7.47 shortly after the opening bell.

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