Morgan Stanley Reviews GoPro's Kolor Acquisition, Earnings
In a report published Tuesday, Morgan Stanley analysts maintained an Equal-Weight rating on GoPro Inc (NASDAQ: GPRO), with a price target of $57.
GoPro has announced the acquisition of Kolor, a software platform enabling virtual reality and spherical media content viewed on smart phones and headset displays. The acquisition shows the management's willingness to expand its software platform.
"We view the acquisition as a positive step towards expanding GoPro's addressable market, but we think management faces a difficult task leveraging the acquired platform for mass market and main stream consumption, the adoption of which would be important for supporting the current stock multiple," the analysts said.
GoPro has reported its 1Q revenues ahead of estimates, driven by units shipped and ASP. The company also reported that more than 50 percent of its revenue was derived from its latest HERO4 models and little pricing pressure as it continued to build its international presence.
GoPro has guided to 2Q revenue of $393 million, significantly ahead of consensus. The EPS estimates for 2Q15 and FY16 have been raised from $0.13 to $0.25 and from $1.37 to $1.58, respectively, to reflect the expected traction in international markets and continued ramp in the company's R&D spend.
Although the Kolor acquisition is a positive move, the analysts commented, "…we await developments to the GoPro platform that would better drive mass market utility in order to sustain long-term growth rates to justify upside to our PT."
Latest Ratings for GPRO
|Mar 2017||Goldman Sachs||Downgrades||Neutral||Sell|
|Mar 2017||Citigroup||Initiates Coverage On||Sell|
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