Top25-SA-Banner

Earnings Beat: Analyst Shares 2 Key Takeaways from GoPro’s (GPRO) Earnings Call


GoPro (NASDAQ:GPRO) shares are shooting up 19% faster than Jack’s magic bean sparking right into a giant beanstalk. The reason? The action-camera maker reported second-quarter revenue and EPS of $283 million and ($0.15) well ahead of the Street’s $270 million and ($0.22) estimates, respectively.

For the third-quarter, the company said it expects revenue between $260 million and $280 million, compared to the Street’s $263.6 million estimate.

Was the report actually good enough to change the long-term trajectory for GPRO stock? Maybe.

Based on better-than-expected outlook, Oppenheimer analyst Andrew Uerkwitz raises his FY18 and FY19 revenues and non-GAAP EPS to $1.15B/($0.17) and $1.23B/$0.23 from $1.14B/($0.26) and $1.21B/$0.05. However, the analyst remains sidelined on the stock with a Market Perform rating. (To watch Uerkwitz’s track record, click here)

Uerkwitz offers two primary takeaways from the earnings call:

  1. Transparency – Management did a good job of walking through the sell-in and sellthrough dynamics over the past 18 months and how it expects to see over the next nine.
  2. Confidence – Management—with three new products in tow—is close to achieving what it set out to do: a good, better, best product launch strategy + clean channel in a robust demand environment. If successful, profitability and sustained growth should follow.

Net net, Uerkwitz believes GoPro management is taking a more thoughtful and focused approach to its addressable market evaluation, instead of positioning the camera as an everyday image capturing devices. As such, GoPro is likely to market to a more targeted audience highlighting the cameras’ situation-specific (such as travel) advantages and story-telling capabilities.

The earnings beat certainly caught many analysts by surprise. TipRanks reveals GPRO as a stock that has not drawn a vote of confidence among Wall Street opinion. Out of 11 analysts polled in the last 12 months, 8 are bearish on GoPro stock, while 8 remain sidelined. With a loss potential of nearly 16%, the stock’s consensus target price stands at $6.04.