Technology analysts comment on action camera maker GoPro Inc (NASDAQ:GPRO) and mobile network equipment maker Nokia Corp (ADR) (NYSE:NOK), following channel checks and a restatement of Alcatel
2015 results, respectively, causing the analysts to predict long-term challenges for each.

GoPro Inc

Analyst Brad Erikson of Pacific Crest commented on GoPro following his firm’s channel checks, suggesting record high inventory levels and a 40% y/y decline in U.S. sell-through in Q1. The analyst does not believe that new software or acquisitions will improve the company’s “core utility problem” and comments on a lack of important features. The analyst explains, “While GoPro cameras remain a compelling device for a small niche of buyers, we believe the editing experience remains the key roadblock in attracting incremental users to the category.”

The analyst shines light on the upcoming Karma drone launch, expected to release at the end of Q2. Erikson states, “We believe the stock has gotten some recent lift anticipating Karma, which could persist depending on how it is initially perceived by investors.” Ultimately, however, the analyst believes short-term gains are not enough to counteract inventory numbers and weakening demand for action cameras. He explains, “While the drone launch doubles the company’s TAM and could support shares in the near term, we still see downside longer term due to action camera softness, with drones likely only gaining modest traction over time.”

Erikson maintains his Sector Weight rating on the company without providing a price target.

According to TipRanks, out of all the analysts who have rated the company in the last 3 months, 25% are bullish, 16% are bearish, and 58% remain on the sidelines. The average 12-month price target for the stock is $11.75, marking an 8% downside from where shares last closed.


Nokia Corp (ADR)

Analyst Kai Korschelt of Merrill Lynch commented on Nokia following its restatement of previously reported EBIT and revenue in 2015, indicated on its P&L (profits and losses) proforma for Alcatel-Lucent. Kroschelt states, “We believe the restatement is due to several aspects such as expensing some of ALU’s R&D that was previously capitalized and also reclassifying certain expenses into other parts of the P&L.” As a result, the analyst notes a 0.6% decline in group revenues and a 3% decline to combined adjusted EBIT for 2015. The analyst believes this impact will continue, stating, “We could envisage a similar impact to the outer years.”

Due to shifting some of its lower-margin business into the Group common functions and Technologies division, the analyst notes a 4% decline in proforma Networks revenues. However, this move also resulted in a 126 bps increase in operating margins to 10.1% vs 8.9%. The analyst adds that “group common losses have increased materially and Technologies margins are c. 600ps lower.

While the analyst notes that the relocations will not have a material impact on total/group profitability of margins, they should increase Nokia’s Networks margins by around 120 bps. He continues, “We believe this implies that Nokia’s margin guidance range for Networks on 10th May could be higher than originally thought – we were assuming a potential 6-9% guidance range (vs consensus of 9.2%) but could now envisage a 7-10% range.”

The analyst maintains his Neutral rating for the stock with a €5.90 price target.

According to TipRanks, 58% gave a Buy rating, 8% gave a Sell rating, and 33% remain on the sidelines. The average 12-month price target for the stock is $7.86, marking a 33% upside from where shares last closed.