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Goldman Expects A Weak Quarter From GoPro

Goldman Expects A Weak Quarter From GoPro
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GoPro Inc (NASDAQ: GPRO) is likely to report a weak quarter, as expected, and there is downside to the 3Q guidance, Goldman Sachs’ Simona Jankowski said in a report. He maintained a Neutral rating on GoPro, with a price target of $11, saying that the company’s performance has been impacted by an aging product portfolio and channel inventory reduction.

Weak Quarter

Jankowski expects the company to report revenues of $193 million, slightly short of the Street expectation of $195 million. Online checks indicate that although GoPro’s cameras continued to be the best-sellers on Amazon and Best Buy, the discounting was increasing.

Related Link: GoPro Shares Have Hit Near-Term Bottom: Oppenheimer

Jankowski forecasted shipments of 741,000 with an ASP of $260, versus the Street’s expectation of 739,000 units with an ASP of $264. Gross margins are likely to come in at 38 percent, marking an improvement from 33 percent in the prior quarter. The expansion is likely to have been driven by lower fixed costs on per unit basis and no negative impact from excess purchase commitments and inventory write-downs.

Prospects Ahead

While GoPro indicated it was witnessing improved traction in Japan, low-cost players are exerting increased pressure in China, which is a key growth market. “GoPro could also face pressure from FX and demand headwinds in EMEA, which generates about one-third of revenues for the company (33% of sales in 2015 and 1Q16),” the analyst wrote.

The revenue estimates for 3Q and Q4 were reduced by 1 percent, following the UK referendum vote. The non-GAAP EPS estimate for 2016 has been lowered from ($0.82) to ($0.85).

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Latest Ratings for GPRO

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

View More Analyst Ratings for GPRO
View the Latest Analyst Ratings

Posted-In: Goldman Sachs Simona JankowskiAnalyst Color Reiteration Analyst Ratings Best of Benzinga


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