Climbing The Wall Of Worry: Longbow Initiates GoPro At Neutral

GoPro Inc GPRO is planning a refresh of its HERO5 model in 2H16 besides launching “Karma.” Longbow’s Joe Wittine initiated coverage of the company with a Neutral rating, preferring to remain on the sidelines till visibility improved into the company’s 2H product pipeline.

“While our survey was constructive on Drone and cautious on HERO5, we think visibility into the detailed specs related to both are paramount to building a short or long case in the shares,” Wittine wrote.

Related Link: It's The Same Old Song For GoPro

Product Performances

Wittine noted that GoPro’s action camera products were already good and there was little scope for further hardware innovation. Moreover, the market for action cameras seemed saturated, as evident in the continued sell-through in 2Q16.

The analyst mentioned that a survey of the action camera supply chain suggested GoPro was witnessing challenges in expanding beyond its core action sports consumer, “though is constructive on the simplified 3-product set.”

Wittine expects GoPro to capture a meaningful share of the over $1 billion drone market, despite its late entry into the segment. A survey of the drone supply chain shows that GoPro’s retail and distribution partners are waiting for the launch of Karma. The actual sales will, however, be determined by the drone’s price and specifications.