JMP's Gauna: GoPro Will Still Outperform, But Is Worth $90 Now

• GoPro Inc GPRO shares have declined 51.6 percent over the past three months, hitting a low of $27.60 on October 8.
• Alex Gauna of JMP Securities has reiterated a Market Outperform rating on the company, while lowering the price target from $105 to $90.
• The company reported weak F3Q15 results, while the F4Q15 guidance also fell short of expectations.

Analyst Alex Gauna explained that a 5 percent quarter on quarter decline in revenue drove the EPS miss for F3Q15. For F4Q15, the company expects sales of $500-550 million, which is expected to lead to EPS of $0.35-$0.45, well below the consensus forecast.

“Management primarily attributed the result to poor demand and excess inventory around the Session that was mispriced when introduced over the summer, and, to a lesser degree, to the lack of a flagship refresh to the product line and FX headwinds in some geographies,” Gauna stated.

While expressing disappointment at the “magnitude of the shortfall,” Gauna stated that the decline in the share price indicates that the miss is already priced in and that the stock now offers an “exceptionally attractive” entry point.

Gauna believes that GoPro is still on track to growing revenues at 23 percent year on year, while being uniquely positioned as the “number one brand channel on YouTube,” being among the only four brand to achieve one billion views.

Gauna also expressed optimism regarding the innovations to be rolled out in 2016, including Virtual Reality, Quads, cloud editing tools, a next-gen Hero flagship device and original content.