Merrill Lynch’s Insights: GoPro Inc (GPRO), Nike Inc (NKE)

Merrill Lynch analysts were out with mixed ratings on action camera maker GoPro Inc (NASDAQ:GPRO) and sportswear giant Nike Inc (NYSE:NKE). Let’s take a closer look.

GoPro Inc

GoPro hosted a media event yesterday for product reveals just in time for the holidays, from the “high-end” Hero5 Black to Hero5 Session cameras to the Karma drone.

In reaction to the new product lineup, Merrill Lynch analyst Jason Mitchell reiterates a Buy rating on GPRO with a price target of $19, which represents just under a 31% increase from where the shares last closed.

From Mitchell’s perspective, the Hero5 Black is of particular interest, as with its touchscreen, menus that are now more user-friendly, and additions of voice control, video stabilization, waterproofing up to 10 meters, and cloud upload, at a reduced $399 price tag, GoPro’s Hero5 Black should be able to rival Garmin’s $499 offering and Sony’s $399 offering.

The analyst believes, “GoPro is maintaining to its ‘good, better, best’ product strategy with Hero5 for $399, 4K Hero5 session at $299, and the Hero session at $199 price points for the holidays. GoPro reaffirmed FY16 guidance ($1.35-$1.5bn rev., 39%-41% gross margins), and we are increasingly confident our 4Q (and street) estimates are achievable.”

“We are building in GoPro Plus rev. into our model and tweaking down our ASP assumptions given the lower price of the Hero5 Black. We still see upside potential for the stock near to intermediate term as GoPro transitions to revenue growth and margins expansion story in FY17,” Mitchell concludes.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, one-star analyst Jason Mitchell is ranked #3,000 out of 4,166 analysts. Michell faces a loss of 8% in his yearly returns. When recommending GPRO, Mitchell earns 0% in average profits on the stock.

TipRanks analytics exhibit GPRO as a Hold. Based on 13 analysts polled in the last 3 months, 3 rate a Buy on GPRO, 8 maintain a Hold, while 2 issue a Sell. The consensus price target stands at $12.70, marking a 12% downside from where the stock is currently trading.screen-shot-09-20-16-at-07-02-pm

Nike Inc

Merrill Lynch analyst Robert Ohmes is out with a research report on shares of Nike Inc (NYSE:NKE) ahead of fiscal first quarter earnings for the year 2017, reiterating a Neutral rating with a $55 price target.

Ohmes notes, “Outside of futures, we believe direct-to-consumer remains strong on digital and store growth as well as heavy clearance in international outlet stores.”

From the analyst’s perspective, the upside Nike gains from its fiscal first-quarter could help the athletic retailer giant maintain its guidance for the financial year of 2017 even as the company overcomes a hurdle with a deceleration in orders.

As sell-through rates remain on a downward trend, Ohmes asserts, “We believe Nike footwear growth in North America is shifting toward casual and Retro styles (Huarache and Presto) creating risk of market share loss to “non-technical” styles from other brands (adidas and Puma).”

The analyst concludes, “We expect Nike to continue to manage inventory through aggressive product return from retailers, which may support futures more than revenue growth,” adding, “While international trends remain healthy, we expect futures to decelerate post EuroCup and Brazil Olympics shipping windows (ended F4Q16) as comparisons turn tougher in key market.”

Ohmes projects EPS for the fiscal first quarter of 2017 of $0.54, just under the Street’s estimate of $0.55, and believes this could “prove conservative.”

According to TipRanks, three-star analyst Robert Ohmes is ranked #1,582 out of 4,166 analysts. Ohmes has a 51% success rate and earns 2.2% in his annual returns. When recommending NKE, Ohmes gains 24.6% in average profits on the stock.

TipRanks analytics exhibit NKE as a Buy. Based on 23 analysts polled in the last 3 months, 15 rate a Buy on NKE, while 8 maintain a Hold. The 12-month price target stands at $63.91, marking a 16% upside from where the shares last closed.


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