Piper Jaffray Heads to Sidelines on GoPro Inc; Slashes Price Target

In a research report issued today, Piper Jaffray analyst Erinn Murphy downgraded shares of GoPro Inc (NASDAQ:GPRO) to Neutral rating and reduced the price target to $25 (from $54), which reflects a potential downside of 11% from last closing price. The decreased rating and price target come after negative Teen Survey and further exploration on the brand positioning in the channel.

Murphy noted, “While we are encouraged with the continued adoption of the GoPro brand among teens, our wish list analysis highlighted more tepid holiday demand for the brand. Our survey results suggest a decline among teens that indicated a GoPro as one of their top two holiday gift wishes. More specifically, 1.0% of teens indicated a GoPro as one of their top-two gift wish, which is down from 1.6% in the Spring and 1.3% last Fall. We believe we are nearing a tipping point with respect to demand. It is important to remember the survey responses are completely unaided. We ask teens to list their top two gift wishes for the holiday.”

The analyst concluded, “While we believe in the GoPro brand and its ability to engage consumers through the stickiness of its content, we see near-term risk tied to the following: i) consumer demand softening (signaled by Teen Survey); ii) recent pricing reductions that could cause gross margins to normalize (LT plan: 42-44%); and iii) weakening trends in GoPro index on Amazon. Our below-consensus Q4 revenue and EPS are unchanged and our FY16 EPS moves from $1.92 to $1.64.”
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 -4.1% and a 37.9% success rate. Murphy has a -44.1% average return when recommending GPRO, and is ranked #3482 out of 3775 analysts.

Out of the 20 analysts polled by TipRanks, 13 rate GoPro stock a Buy, 6 rate the stock a Hold and 1 recommends a Sell. With a return potential of 135%, the stock’s consensus target price stands at $65.69.

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