Piper Jaffray: We Remain Buyers of GoPro Inc Following Earnings Release

GoPro Inc (NASDAQ:GPRO) shares are up in after-market trading Tuesday after the company released its first-quarter earnings results, beating sales and EPS expectations. After reviewing the results, Piper Jaffray analyst Erinn Murphy issued a report, reiterating an Overweight rating and $55 per share price target on the stock.

Murphy noted, “Shares are volatile following the market’s initial read on GPRO’s earnings but we remain bullish and would be buyers on any weakness. GPRO is showing strong signs of a growth brand in early phases of growth with underlying sales and gross margin beats. Q1 sales and EPS handily beat expectations.”

“Key quarterly highlights were as follows: 1) overall sales were $363M–up 54% Y/Y (ahead of our $341M estimate); 2) int’l sales growth was up 66% Y/Y continuing to point to broader appeal for this brand globally; 3) gross margin was 45.2%–up 410 bps and besting our 44.5% estimate; and 4) EPS was $0.24 (vs our $0.17 estimate) albeit with 2 cents coming from an improved tax rate. On the call, we anticipate guidance on Q2.”, the analyst added.

Bottom line

The analyst believes GPRO is an undervalued, high-growth consumer brand with an opportunity to meaningfully expand its market share with time. She believes the company can at least double its unit sales (from 5.2M to 10M) over time. From a thesis perspective, Murphy sees GoPro as a relevant consumer brand benefiting from early stage of customer adoption through accelerating product sales of capture devices within a broader eco-system that is capitalizing on experiences.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Erinn Murphy has a total average return of 0.3% and a 49.1% success rate. Murphy has a 0.1% average return when recommending GPRO, and is ranked #2435 out of 3581 analysts.

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