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GoPro Is 'Late' To The Drone Market

GoPro Is 'Late' To The Drone Market
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  • GoPro Inc (NASDAQ: GPRO) have appreciated 2.28 percent over the past one month, after having declined 72.47 percent over the past one year.
  • Northland Capital’s Gus Richard has maintained an Outperform rating on the company, with a price target of $39.
  • Although the company was a dominant player in the drone market a couple of years ago, Richard stated that there were no drones with a GoPro camera at CES.

Analyst Gus Richard mentioned that a clear theme at CES this year was that “imaging is the next frontier for leading edge logic,” and that the need for imaging processing “spans VR, AR, robotics, autonomous vehicles, high-end image capture and display.”

Discussions with several manufacturers revealed that the drone market for 2015 was in the range of 1.5 million to 1.7 million units, with average ASPs of $1,000. This makes the market worth $1.5 billion to $1.7 billion.

Richard estimates that GoPro shipped 800,000 units in CY14, representing 16 percent of its units and 30 percent of its revenues, for use in drones. Unit shipments are likely to have declined to about 500,000 units in CY15, which Richard said was an unexpected headwind.

According to the Northland Capital report, “GPRO is on track to launch its drone in 1H:15 and it looks like it is late to the market.”

Given that a major driver of the drone market is image capture, Richard expects 360 degree cameras to become an important feature, especially with virtual/augmented reality gaining greater importance.

“While the GPRO's 360-degree camera will help it in the drone market, it is likely to be a higher-end niche product initially over the next year,” Richard added.

Latest Ratings for GPRO

Feb 2018Bank of AmericaMaintainsUnderperformUnderperform
Feb 2018JP MorganDowngradesOverweightNeutral
Jan 2018Morgan StanleyDowngradesEqual-WeightUnderweight

View More Analyst Ratings for GPRO
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