Market Overview

Morgan Stanley: GoPro Setting A High Bar For Q4

Morgan Stanley: GoPro Setting A High Bar For Q4

GoPro Inc (NASDAQ: GPRO) reported third-quarter results Thursday that were in line with expectations, but management's guidance represents a high bar, according to Morgan Stanley.

The Analyst

Erik Woodring maintained an Underweight rating on GoPro with a $4.50 price target.

The Thesis

GoPro's third-quarter report was mostly in-line with management's pre-announcement, but its updated full-year guidance implies a "high bar" is set for the fourth quarter, Woodring said in a Friday note. (See his track record here.)

The math behind the 2019 guidance implies that 46% of total revenue will come in the holiday season quarter, which is the highest fourth-quarter mix in company history, the analyst said. 

Early sales of the new HERO8 action camera appear to be strong, but the company faces two hurdles to reach its outlook, he said.

First, the holiday season is six days shorter year-over-year, and forecasting consumer demand is never an easy task.

GoPro also discussed internal 2020 targets, which are not the same as established guidance, Woodring said.

GoPro is internally targeting at least 25% year-over-year adjusted EBITDA growth and 40% non-GAAP earnings per share growth, which roughly translates to EBITDA of $113 million and EPS of 49 cents, the analyst said.

These figures are "far ahead" of current estimates, including the research firm's estimates of $94 million in EBITDA and EPS of 38 cents, according to Morgan Stanley. 

Monster Holiday Season Ahead? 

GoPro's new HERO8 Black is off to the best start in the company's history, suggest prior concerns of growing competition from smart phones are overblown, The Verge reported.

Each new camera GoPro releases has sold better than ever, and the company could be set up for a "monster holiday season," the publication said. 

GoPro could also see its second-best quarter ever in terms of revenue if total sales come in between management's forecast of $555 million to $590 million, The Verge said. 

Yet a milestone fourth quarter would come in the wake of Thursday's report, in which total revenue of $131 million was the lowest of any quarter since GoPro went public, the publication said.

Revenue may have been impacted by a slight delay in the HERO8 launch due to a manufacturing issues, and the third quarter did have the the lowest operating expenses in five years, at $99 million.

"In other words, a quarter with that little revenue a few years ago would have been devastating. Instead, the company's stock was up around 6% in after-hours trading," according to The Verge. 

Price Action

GoPro shares were up 10% at $4.89 at the time of publication. 

Related Links:

GoPro Crashes 20% After Production Delay, Analysts Remain Cautious

GoPro: Tariff Proof, But This Upcoming Catalyst Is What Really Matters

Photo courtesy of GoPro. 

Latest Ratings for GPRO

Oct 2019MaintainsUnderweight
Aug 2019MaintainsNeutral
Sep 2018UpgradesPerformOutperform

View More Analyst Ratings for GPRO
View the Latest Analyst Ratings

Posted-In: Analyst Color Earnings News Guidance Price Target Reiteration Analyst Ratings Tech Best of Benzinga


Related Articles (GPRO)

View Comments and Join the Discussion!
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

These Are The Stocks Being Traded By Some Of The Top Traders On Webull

Stocks That Hit 52-Week Lows On Friday