Analyst Michael Pachter of Wedbush weighs in on GoPro Inc (NASDAQ:GPRO) and Glu Mobile Inc. (NASDAQ:GLUU) after both companies posted fourth-quarter earnings yesterday evening. The analyst remains bullish on GoPro despite lackluster earnings, believing new product launches will drive up the stock . On another note, Pachter remains on the sidelines on Glu Mobile as he is unsure that the company’s current celebrity strategy will last. Michael Pachter has a 35% success rate with an average loss of 9.8% per recommendation, according to TipRanks.
Pachter maintains his Outperform rating on shares of GoPro and decreased his price target from $18 to $13, after the company posted Q4:15 earnings yesterday. The analyst stated that revenues of $437 million were generally in line with his $435 million estimate, while EPS of ($0.08) missed his $0.01 estimate. Similarly, the company posted well below expected revenue guidance of $160 to $180 million next quarter, accounting for an increase in operating expenses throughout the year. Going forward, the analyst is lowering his 2016 revenue and EPS expectations “to reflect lower revenue per unit sold after the HERO4 price cuts, fewer units sold due to discounting GERO models, and a higher cost structure than previously anticipated.” However, the analyst is bullish on “improved price points with drone sales, and a more streamlined product lineup,” which should increase customer satisfaction.
While the analyst believes shares will be “range-bound near-term”, he believes investors are waiting for “a reversal in sales declines from the introduction of new devices.” Pachter states that the launch of the Karma and Hero5 model later this year will be catalysts for the stock.
According to TipRanks’ statistics, out of the 17 analysts who have rated GoPro in the past 3 months, 6 gave a Buy rating, 2 gave a Sell rating, while 9 remain on the sidelines. The average 12-month price target for the stock is $14.93, marking a 57% upside from current levels.
Glu Mobile Inc.
Michael Pachter also weighed in on Glu Mobile after the company posted Q4 earnings. The analyst states both positive and negative aspects of the earnings and company as a whole. For this quarter, the company posted revenues of $58 million, well above the analyst’s $52 million projection. It also posted higher-than-expected earnings per share, which management attributed to the success of mobile game Kim Kardashian:Hollywood. However, the analyst provided lower revenue guidance of between $250 and $275 million, compared to management’s already lowered guidance of $275 million (due to lackluster game performance) and expects the company to “generate a modest loss for 2016.”
While the company plans to launch 8 new games this year, the analyst is cautious on the potential success after the company had “difficultly successfully monetizing the James Bond and Katy Perry franchises.” As a result, the analyst is “not willing to give Glu the benefit of the doubt” for future releases, no matter how famous the celebrity is. Although the company is “well positioned to grow along with overall mobile games demand” going forward, Pachter is unsure about the profit generating capabilities of the company as even winner game Kim Kardashian:Hollywood cannot “drive overall results solidly into the black.” Pachter is unsure of managements potential “to attract unique audiences” if the company only relies on celebrities for its games.
The analyst maintains his Neutral rating on the stock and $3.30 price target.
According to TipRanks’ statistics, of the 7 analysts who have rated the company in the past 3 months, 3 gave a Buy rating while 4 remain on the sidelines. The average 12 month price target for the stock is $4.17, marking a 65% upside from current levels.