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Citi Lifts Sell Rating Off GoPro

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GoPro Inc (NASDAQ: GPRO)'s decision to lower its staff headcount by more than 200 and refocus on its core products and services earned it an upgrade from analysts at Citigroup.

Stanley Kovler upgraded shares of GoPro to Neutral/High Risk from Sell/High Risk with a price target raised to $9 from $8 as the new strategy will move up the company's timetable towards profitability this year as opposed to 2017.

Kovler noted that when he initiated coverage of GoPro earlier this month, his Sell rating was based on GoPro's high operating expenditures. Now that the company will spend $100 million less in opex, its EBITDA outlook is more positive. The analyst also argued the company's announcement will at the very least put the bear story on hold for a few quarters as the new leaner cost base provides some downside support.

Risks Remain

Despite the upgrade, there are still some risks to GoPro's story moving forward. Specifically, there's a plethora of new consumer electronics products competing for consumers dollars, including the upcoming new iPhone, artificial reality headsets, and new home automation products.

However, the fact that GoPro is off to a 14 percent revenue growth in 2017 after a "dismal" 2016 when revenue fell 27 percent sets up for easier and more achievable comps.

See Also:

GoPro Positioning For Profitability Via Cost-Cutting, But Baird Remains Underperform

Ambarella And Life After GoPro

Latest Ratings for GPRO

DateFirmActionFromTo
Oct 2019MaintainsUnderweight
Aug 2019MaintainsNeutral
Sep 2018UpgradesPerformOutperform

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Posted-In: action cameras Citi Stanley KovlerAnalyst Color Upgrades Price Target Analyst Ratings

 

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