Barclays Upgrades GoPro, Says 'Content Is Now Upside'

In a report published Tuesday, Barclays analyst Joseph Wolf upgraded the rating on

from Equal-Weight to Overweight, while raising the price target from $50 to $65, given the company's strong execution, acquisitions, new products, external hires and continuing brand strength. "Since the IPO the company's progress has reduced our concerns considerably," Wolf stated, while adding that content would drive valuation upside going forward, especially the new Hero4 session and the new drone. In addition, although there were some concerns regarding margins and mix, the GoPro posted a 45 percent improvement in gross margins for 1Q15, from 42 percent in 2Q14, with its high-end devices continuing to be the best sellers. Related Link:

"Strong execution since the IPO with the intro of the Hero4 and the compact Session solidify the hardware lead. New developments like 360 video, drones, better software, and a planned a portal should further expand the lead," according to the Barclays report. Also, the company's TAM has been expanding, both in terms of geography and demographically. TAM is also expected to expand due to the new Session and drones. "With hardware numbers up and the stock down our concerns about media contribution have faded. Recent hires of Zander Lurie and Charlotte Koh highlight a focus on content that when combined with a GPRO portal and better editing and production tools could produce an interesting avenue for brand extension for GPRO," Wolf added.