Oppenheimer Analysts Remain Sidelined on GoPro Inc (GPRO) and J C Penney Company Inc (JCP) Despite Recent Strategic Shifts


Analysts at Oppenheimer weighed in on GoPro Inc (NASDAQ:GPRO) and J C Penney Company Inc (NYSE:JCP) and maintained Perform ratings on both companies due to challenging macro conditions and the corporations’ failure to differentiate themselves in their niche consumer markets. Let’s take a closer look:

GoPro Inc

Andrew Uerkwitz, analyst at Oppenheimer, weighed in on Go Pro Inc. and reiterated a Perform rating following several strategic changes at the company. GoPro has faced obstacles in developing a more mainstream usage of its products due to challenges with its interface, lack of options to share footage immediately, and consumers’ preference to use their smartphone. Uerkwitz writes, “It simply takes too much time to upload, edit, and share a video using a GoPro device… consumers want to share immediately in the moment not later.” While these challenges persist, GoPro has acquired mobile app companies in an attempt to compete with other video technologies available.

Uerkwitz shares, “The acquisitions of mobile app companies Stupeflix (Replay app) and Vemory (Splice app) go a long way in correcting the bottlenecks consumers currently encounter using a GoPro device.” Replay and Splice are apps that provide video editing tools for mobile devices. Uerkwitz views these acquisitions as a strong positive shift in GoPro’s software strategy because it allows a “two-pronged editing approach” and improves the mobile experience for users.

Despite these strategic improvements for mobile users, Uerkwitz remains sidelined because he feels that GoPro is making “long overdue” strategic changes. The company remains “still in catch-up mode” regarding technological advancements such as 360 consumer capture, drone technology, and software improvements. Uerkwitz conveys his belief that “long-term investor expectations are unrealistically optimistic as GoPro tries to appeal to the mass market.”

In the last 3 months, 5 analysts have been bullish on GoPro, 10 are on the sidelines, and 2 are bearish. According to TipRanks, the average 12-month price target among these 17 analysts is $14.21, marking a 19% potential upside from where shares closed. Analyst Andrew Uerkwitz has a 50% success rate and a 1.1% average return per recommendation.

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J C Penney Company Inc

Analyst Brian Nagel of Oppenheimer has been following J C Penney very closely throughout “the ups and downs of its reinvention and subsequent stabilization efforts.” Nagel shared that the company may be back on the offense following its reiteration of encouraging financial guidance for FY16 and FY17. He feels “more confident in nearer term prospects for the chain than at any prior point in [his] coverage of the name.”

Despite his optimistic views, Nagel reiterated a Perform rating on JCP following a sell-side analyst meeting with JCP management, though he did not provide a price target. The rating reflects concerning macro challenges that may arise for the company due to recent spending trends, reduced fuel prices, and job market instability. Nagel explains, “retail turnarounds, particularly those dependent on market share gains, are difficult to execute amid challenging macro conditions.”

CEO Marvin Elliston and management are increasingly focused on “cost controls, while continuing to reconnect with core customers through an improved offering of private-label and branded product.” JCP indicated its expectations of $1 billion EBITDA in FY16 and $1.2 billion in FY17. The company has had recent success in sales of its private-label items, though the home category revenue remains depressed. The corporation also intends to increase efforts “on monetizing assets to pay down long-term debt.”

The analyst has a 4.9% average return per recommendation and a 54% success rate. According to TipRanks, the average 12 month price target for JCP is $10.50 based on 12 ranked analysts, marking a 3% potential upside from current levels. Of these 12 analysts, 5 are bullish, 1 is bearish, and 6 remain neutral.

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