As U.S. stocks are entering earnings season, Wedbush analyst Michael Pachter weighed in today with price target cuts on the action camera giant GoPro Inc (NASDAQ:GPRO) and micro-blogging giant Twitter Inc (NYSE:TWTR).
Pachter reiterated an Outperform rating on GoPro shares, and reduced the price target to $50 (from $76), ahead of the company’s third-quarter results and business outlook, which will be reported on Wednesday, October 28, 2015.
Pachter wrote, “We expect another quarterly beat, but the magnitude of the upside may be smaller than in past periods due to softening demand for unimpressive new products. We expect revenue of $455 million and EPS of $0.35 vs. consensus of $434 million and $0.29 and guidance of $430 – 445 million and $0.29 – 0.32. We expect the high-end HERO4 Black and Silver to again account for over 50% of sales, with the entry-level HERO closing the gap for units.”
“Lowering our Q4 estimates as a new product launch before YE is unlikely. We are modeling revenue of $700 million and EPS of $1.06 versus consensus of $694 million and $0.83. Consensus EPS appears too low given GoPro earned $0.99 of EPS on $634 million of revenue in Q4:14,” the analyst continued.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Pachter has a total average return of -0.1% and a 46.2% success rate. Pachter has a -51.8% average return when recommending GPRO, and is ranked #2648 out of 3788 analysts.
Out of the 18 analysts polled by TipRanks, 12 rate Twitter stock a Buy, while 6 rate the stock a Hold. With a return potential of 110%, the stock’s consensus target price stands at $60.93.
Pachter reiterated an Outperform rating on Twitter shares, while reducing the price target to $76 (from $50), as the company will report its earnings for the fourth fiscal quarter after the market close on Tuesday, October 27.
Pachter expects revenue and adjusted EBITDA in-line with the preannouncement, but he believes that user growth is likely to disappoint. He wrote, “We expect revenue of $565 million, adjusted EBITDA of $117 million, and EPS of $0.05, versus consensus of $560 million, $117 million, and $0.05. Twitter did not mention user levels or user growth last Tuesday, suggesting that those figures will be underwhelming and disappointing. Investors have become concerned about Twitter’s slowing user growth, with the Q2:15 MAU y-o-y growth figure (excluding SMS fast followers) slowing to half of the Q2:14 amount and just over a quarter of the Q2:13 amount. Q2 MAUs of 304 million were up just two million q-o-q as mass market penetration remains elusive. Had user growth been strong in Q3, Twitter would likely have said so; because user figures were omitted, we expect MAUs to disappoint again, resulting in a post-results sell-off.”
Out of the 31 analysts polled by TipRanks, 15 rate Twitter stock a Buy, 15 rate the stock a Hold and 1 recommends a Sell. With a return potential of 27%, the stock’s consensus target price stands at $39.15.