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The Drone Wars Are Heating Up: Could GoPro Be Left In The Dust?

The Drone Wars Are Heating Up: Could GoPro Be Left In The Dust?

Bank of America Merrill Lynch sees the introduction of Mavic drone by DJI as having minimal impact on its fourth-quarter estimates for GoPro Inc (NASDAQ: GPRO). That said, the firm is of the view that Mavic increases risk to its 2017 estimates due to its competitive size and pricing relative to GoPro's Karma.

Mavic Vs. Karma

Jason Mitchell, an analyst at the firm, reviewed the features of Mavic, the competing drone for GoPro's Karma:

  • Mavic is foldable for portability just as Karma but has an edge over Karma due to many advanced flight features, including auto follow, hand gestures, object avoidance and live streaming capabilities.
  • Mavic is priced at $999, the same as Karma. However, the former with no remote costs $749 and the latter with no camera is priced at $799.
  • Mavic has a longer flight time of 27 minutes compared to 20 minutes for Karma.

Accordingly, the analyst surmises that Mavic will be Karma's biggest competitor in the drone space in 2017.

Missing Features To Hurt?

The firm believes Karma will be hurt by the lack of features such as object avoidance and auto-follow features. Although GoPro indicated that auto-follow features will be added with software updates, itinerary for it is not clear.

Related Link: GoPro Investors Eagerly Watching DJI's New Drone Unveiling (And They Aren't Looking Happy)

Karma's Edge

Bank of America Merrill Lynch believes Karma will appeal to casual consumers and film-focused users due to its modular design, high quality camera and brand name strength. However, the firm sees risk from competitive pricing by DJI, which will pressure product margins.

The firm's minimal fourth quarter impact assumption is due to the fact that it has modeled a minimal amount of Karma units in its estimates due to the late October launch and limited distribution. That said, the firm still thinks Karma can achieve a 4–5 percent share in 2017.

The firm maintains its Buy rating on the shares of GoPro, and its price objective for the shares is $19.

GoPro shares were down 1.37 percent at $16.56 at time of publication.

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Latest Ratings for GPRO

Nov 2020Morgan StanleyMaintainsUnderweight
Aug 2020Morgan StanleyMaintainsUnderweight
May 2020WedbushMaintainsNeutral

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