Analysts cut their price targets on the renewable energy giant SolarCity Corp (NASDAQ:SCTY) and action camera giant GoPro Inc (NASDAQ:GPRO), after the companies reported third-quarter earnings that failed to impress investors.
In a research report released Friday, Roth Capital analyst Philip Shen reiterated a Buy rating on shares of SolarCity, while reducing the price target to $55 (from $70), after the company reported a wider than expected third-quarter loss, and offered a fourth-quarter outlook that fell short of analyst forecasts.
Shen observed, “The competitive dynamics have shifted in SCTY’s favor given the challenges among its peers, and we expect the company to gain share as a result. Most of the east coast markets are quite healthy. Management indicated that it cracked the code on small commercial last quarter, and SCTY delivered with 51MW in Q3 vs. 21MW in Q2 and will have even greater mix of commercial in Q4. While CAC ran high in Q3, it appears that it could be down meaningfully on the lower volumes resulting in more profitable volumes. That said, it is not without risk. El Nino could dampen volumes in CA this winter, CAC could take longer-than-expected to lower, and Silevo could be delayed meaningfully to name a few potential issues. All in, we believe valuation for the stock is becoming more attractive. A key risk factor/catalyst to watch over the near-term is the final ruling on NEM 2.0.”
“Due to SCTY’s weaker growth outlook, we lower our Q4 installation forecast to 280MW vs. prior ROTHe of 338MW, which brings our 2015 annual installation forecast to 878MW vs. prior ROTHe of 953MW. We cut our 2016 installation forecast 1.15GW from prior of 1.5GW,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Philip Shen has a total average return of -12.5% and a 28.3% success rate. Shen has a -19.1% average return when recommending SCTY, and is ranked #3768 out of 3808 analysts.
Out of the 8 analysts polled by TipRanks in the last 3 months, 5 rate SolarCity stock a Buy, 2 rate the stock a Hold and 1 recommends a Sell. With a return potential of 141%, the stock’s consensus target price stands at $70.80.
In a research note issued yesterday, Dougherty analyst Charlie Anderson reiterated a Buy rating on shares of GoPro, and reduced the price target to $32 (from $30), after the maker of action cameras reported profit and sales that trailed consensus estimates amid growing concern that it’s a single-product company.
Anderson wrote, “If we were to sum it up, the numbers are a full accounting of the Hero4 Session product whiff. GoPro took a $19MM/$0.10 EPS hit in Q315 due to the Session price cut (from $400 to $300) and management suggested retailers are carrying maybe a month of inventories higher than a year ago due to a combination of slow-moving Session cameras and a tough comp.”
The analyst continued, “We can debate why the Session didn’t work (management offered up that it was priced too high, not supported with enough marketing and maybe didn’t have high enough specs). The bottom line to us is that GoPro’s historic formula for success has been delivering products with image quality that could not be found on any other product in the world, whereas Session’s image quality could be found and exceeded by multiple products in the market.”
Bottom line, “We are hopeful that GoPro has learned from its mistake and can reverse course in 2016 with multiple new higher end products, including a quadcopter/drone. GoPro did tease footage from the forthcoming product and it looks good. Unfortunately part of the lesson includes higher marketing and advertising expenses and as a result our OpEx estimates are going up significantly and eating into EPS.”
According to TipRanks.com, analyst Charlie Anderson has a total average return of 30.6% and a 65% success rate. Anderson has a -15.1% average return when recommending GPRO, and is ranked #292 out of 3808 analysts.
Out of the 20 analysts polled by TipRanks, 11 rate GoPro stock a Buy, 7 rate the stock a Hold and 2 recommend a Sell. With a return potential of 91%, the stock’s consensus target price stands at $47.75.