PiperJaffray Sites Valuation Concerns On GoPro, Says Shares Have Little Room For Additional Upside

On Tuesday, Sean Naughton of PiperJaffray downgraded shares of GoPro GPRO to Neutral from Overweight whit a $90 price target. “We remain bullish on GoPro's growth opportunity, both in the near-term and longer-term, but would wait for a more attractive entry point,” Naughton wrote in his note. According to Naughton's “Taking Stock With Teens survey” 17.2 percent of teens stated that their family owns a GoPro device. This compares favorably to 12.6 percent in Spring 2014 and 9.3 percent in Fall 2013. 1.33 percent of those surveyed indicated that a GoPro device is on their “wishlist” for a birthday or holiday gift. This compares favorably to 0.64 percent in Sprint 2014 and 0.31 percent in Fall 2013. However, the analyst states that the “positive survey results were not unexpected.” Naughton concluded from the survey that GoPro's popularity is showing no signs of slowing among the teen demographic. In addition, the company's HERO4 device should create additional demand among the teen demographic while an entry-level HERO will introduce new users across various demographics. Despite growing popularity among key demographics, Naughton notes that shares are currently trading at 90x fiscal 2015 consensus EPS (the analyst has a $1.00 fiscal 2015 earnings per share estimate) making it “hard to be as bullish” at current valuations.