GoPro Inc (GPRO) Execution Is Not the Issue: Oppenheimer

Analyst has become more positive on GoPro's new, impressive software; cautious only on sustainability.

GoPro Inc (NASDAQ:GPRO) may still have Oppenheimer analyst Andrew Uerkwitz playing it safe, but the analyst has become increasingly confident on this action camera maker and its standout hardware. As Uerkwitz explains, the company’s products have never been a point of concern, but rather, the analyst has questioned more importantly a matter of “shareability.”

“We believe the majority of consumers are satisfied with the mobile experience: click, filter, and share. To break this cycle, one has to be hyper creative in the way videos/pictures are captured but also retain the mobile sharing quickness,” explains Uerkwitz. Has the action camera maker finally broken this “cycle,” with its Hero6?

Though the analyst continues to root for GoPro’s success from the sidelines amid apprehension on the wider scope of “market dynamics,” he recognizes that this software upgrade could bump up the company’s revenue growth. Not only is Uerkwitz lifting his revenue growth forecasts to high single digits while also raising his EPS expectations up to $0.50 on lower operating expense leverage, the analyst likewise sees a better chance for GoPro to gain market share within the capture industry.

When assessing the Hero6, Uerkwitz sings the new product’s praises, asserting, “3x faster wifi is the most important spec. This should allow users to more quickly get footage to the app or cloud. This helps fix the biggest bottleneck in sharing.”

Specifically, in terms of QuikStories, “GoPro has come a long way—no more six-hour editing sessions on a PC,” commends the analyst, who anticipates this could come into play down the line for the company: “We believe GoPro’s longer-term sustainability is reliant on the success of QuikStories and its app usage.”

Additionally, the analyst urges investors to look past GoPro’s Fusion camera as more than just “niche,” placing tremendous value on the “innovative” software that could pay off, going as far as to claim: “Fusion is the future, a device that goes beyond mobile.”

Ultimately, the overall picture flashes quite positively for GoPro from where Uerkwitz is standing, as he concludes, “With QuickStories, image stabilization, faster device wifi, and smart scene detection, GoPro is on the right track. The 360 camera, Fusion, GoPro impressed us with the capture editing features including OverCapture. Our Perform rating is now based on a shrinking capture market and the sustainability of market share gains not on execution.”

For now, the analyst reiterates a Perform rating on GPRO stock without listing a price target. (To watch Uerkwitz’s track record, click here)

Wall Street analysts are mostly cautious when it comes to the action camera maker’s opportunity, with TipRanks analytics revealing GPRO as a Hold. Based on 7 analysts polled by TipRanks in the last 3 months, 1 rates a Buy on GoPro stock, 4 maintain a Hold, while 2 issue a Sell. The 12-month average price target stands at $7.83, marking a 30% downside from where the stock is currently trading.

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