Pacific Crest On GoPro: Checks Are 'Encouraging'

• GoPro Inc GPRO shares declined more than 27 percent year-to-date and are currently significantly below their 52-week high of $98.47.
• Pacific Crest’s Brad Erickson maintained a Sector Weight rating for the company.
• GoPro’s current valuation appears tempting, Erickson said, citing the expected strong first-half performance.

Analyst Brad Erickson mentioned that August channel checks in the US had provided positive feedback.

“Based on early holiday channel fill and GoPro's recent body language at our Vail conference, we think a high-end holiday refresh is unlikely, which could wind up being positive for GPRO if upside continues.”

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Erickson believes that GoPro is “beginning to build inventory a bit sooner than last year in front of the all-important holiday.” He added, however, that the current levels seemed fine, given that inventory reached over three weeks last year, and the quarter still seemed to be tracking “towards some upside.”

GoPro’s upside this year may be driven by better-than-expected demand for the company’s products and the expected increase in European shipments of Hero 4, the Pacific Crest stated.

“We continue to believe there is likely near- and medium-term upside to numbers, which our fair-value estimate captures, but we struggle with a path beyond the middle to high $50 range, which keeps our rating at Sector Weight,” Erickson added.