GoPro (NASDAQ:GPRO) provided fresh evidence of its turnaround on Thursday by posting a first-quarter earnings beat and sales that fell much less than Wall Street had feared. The stronger-than-anticipated results helped juice GoPro’s shares more than 10% in today’s trading session.
The action camera giant posted adjusted loss of 34 cents per share, which was narrower than analysts’ estimate of a loss of 38 cents per share. In addition, the company’s revenue came in at $202.3 million, beating the Wall Street consensus estimate of $182 million.
Oppenheimer analyst Andrew Uerkwitz commented, “On the last call, management indicated it better understood customer demand: it reset prices appropriately and rid the channel of the Session. In addition, they made the decision to cut the aerial group. After one quarter, things are getting better. Opex are significantly down y/y, camera sales are up y/y. More important, balance sheet items that often get overlooked appear in much better shape. Inventory, for example, is at its lowest March level since 2014. This should help with the boom and bust sales quarters and allow investors to get more comfortable with revenue/margin growth direction […] With a simpler business model and product offering, we see better execution more easily attainable and higher probability that guidance will be met or exceeded.”
“We adjust our model based on better than expected results and 2Q guidance (+$35M above Street at revenue midpoint). We now see break-even by year and easy leverage in 2019 if opex is held steady. Maintain Perform as we await another quarter of execution,” Uerkwitz concluded.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Andrew Uerkwitz has a yearly average return of 14.1% and a 61% success rate. Uerkwitz has a 9.6% average return when recommending GPRO, and is ranked #249 out of 4773 analysts.
Wall Street believes Uerkwitz is smart to play it safe when it comes to GoPro’s prospects ahead, as TipRanks analytics reveal GPRO as a Hold. Out of 4 analysts polled in the last 3 months, all 4 remain sidelined on the stock. However, with a potential upside of nearly just above 20%, the stock’s consensus target price stands at $6.65.