Tech analysts provide earnings previews for e-commerce giant Alibaba Group Holding Ltd (NYSE:BABA) and action camera maker GoPro Inc (NASDAQ:GPRO). While one analyst is bullish on Alibaba, believing new strategic initiatives represent a catalyst for the stock, the other remains on the sidelines for GoPro, watching for how the market will react to new products.
Alibaba Group Holding Ltd
Analyst Fawne Jiang of Brean Capital provides her insights for Alibaba’s FY4Q16 earnings results, set to release on May 5 before market open. Regarding GMV, Jiang expects earnings to align with consensus estimates of RMB~730 billion, reflecting 22% y/y growth. The analyst also predicts a 31.5% y/y increase in take rate “driven primarily by improving mobile monetization as well as continued focus/shift towards scalable merchants.” However, the analyst points to “incremental earnings pressure in the near term” due to recent acquisitions and increased investments.
The analyst explains what expects the company to focus on in 2017. She states, “Heading into FY2017, we expect BABA will continue to focus on improvement on user experience and monetization.” She continues, “Specifically, three key channels BABA currently focuses include: content, Internet celebrity and social.” Fawne also points to recent initiatives to improve user engagement and stickiness through ongoing product updates and enhancements in content and social communication. One such effort is the development of Tmall/Taobao’s Q & A system, designed to “reduce fake products/order brushes which will make the platform more healthy going forward.” Ultimately, Fawne believes BABA’s increased focus on “capturing the changing dynamics of the industry,” such as a shift to video shopping and live broadcasting shopping, “will help to drive both traffic/GMV growth and offer potential room for further monetization improvements.”
The analyst reiterates a Buy rating on the company with a $96 price target.
Fawne Yang has a 46% success rate recommending stocks with a 6.2% average return per recommendation. According to TipRanks, all 7 analysts who have rated the company in the past 3 months gave a Buy rating. The average 12-month price target for the stock is $99.14, marking a 31% upside from where shares last closed.
Oppenheimer analyst Andrew Uerkwitz provided a Q1 earnings preview for GoPro, set to release today after market close today. The analyst believes that results from Q1, as well as Q2 guidance “could be a bit rough as the company is in full-on transition mode.” Due to a decreasing TAM for GoPro’s capturing devices, the analyst believes the company “must build a robust software platform to cultivate a multi-device ecosystem” and expects more color on these developments in the earnings call.
Recently, company engaged in two acquisitions related to mobile video editing and sharing as part of its effort to diversify its products. The analyst states, “We expect management to elaborate on their strategic vision of software’s role as the company tries to bridge the user experience gap between its camera and smartphones.” Last month, Gopro also introduced its developer program to integrate its products into cars, toys, and film products. The analyst notes that this is a” positive step for GoPro to diversify its customer base and enhance the value of its cameras.”
Although the analyst praises GoPro’s new initiatives to diversify its products, he notes that investors will be watching for how the company executes on these initiatives. He states, “We applaud GoPro’s recent moves to build a deeper technical bench and listen closely to customer and partner demands. However, we remain sidelined as upcoming product releases (drone, flagship camera, and possibly a 360° camera) can introduce much volatility.”
The analyst reiterates a Market Perform rating on the company without a price target.
According to TipRanks’ statistics, Andrew Uerkwitz has a 53% success rate recommending stocks with an average return of 4.7% per recommendation. Out of the 6 analysts who have rated the stock in the past 3 months, 2 gave a Buy rating, 2 gave a Sell rating, and 2 remain on the sidelines. The average 12-month price target for the stock is $12.33, marking an 8% upside from where shares last closed.