Shares of high-definition action camera company GoPro (NASDAQ: GPRO) dropped roughly 10% in trading on Friday, February 6, following the company’s fourth quarter 2014 earnings results and first quarter 2015 outlook announcement made the prior evening. Although the company’s profits nearly tripled in its fourth quarter, investors were turned off from GoPro’s Q1’15 forecast and the surprise departure of its chief operating officer, Nina Richardson, scheduled for the end of February.
Highlights from GoPro’s Q4’14 report include earnings of $0.83 per diluted share, beating analysts’ consensus estimate of $0.70 per share and marking a 151.5% increase on a year-over year basis. Revenue increased 75% from the same quarter a year prior to $633.9 million, exceeding analysts’ consensus estimate of $580 million.
For the first quarter of 2015, GoPro has forecast earnings of $0.15 to $0.17 per share and revenue between $330 million and $340 million. Wall Street expects the company to post earnings of $0.17 a share and $325 million in revenue.
GoPro’s impressive fourth quarter is mostly due to a very successful holiday season. In the fourth quarter the company exceeded analysts’ estimates of 2 million shipments of GoPro devices, totaling 2.4 million. For all of 2014, GoPro shipped 5.2 million devices total. GoPro also saw huge success based on its recent deals with the NHL and ESPN to show live GoPro footage from athletes during games.
“We’re feeling good,” Chief Executive Nicholas Woodman said. “GoPro was one of the best-selling products this holiday, selling-in an average of 1,000 units per hour for the entire quarter. With this many new recruits to the GoPro movement, we’re sure to see some incredible content in 2015.”
However, GoPro is starting to see increased competition from rivals like Sony (NYSE: SNE) who revealed a similar device to GoPro’s Hero line at the CES show in Las Vegas last month called the Action Cam FDR-X1000V. Technology giant Apple (NASDAQ: AAPL) was also granted a patent last month for an action camera, resulting in a 12% drop in GoPro shares the day the patent was rewarded.
On February 6th, Morgan Stanley analyst James Faucette reiterated an Equal-Weight rating on GoPro with a $57 price target following the company’s Q4’14 earnings. The analyst reasons his rating on GoPro’s increasing competition, noting “we believe GoPro must lead in the automation of video editing and sharing through continued development of its software platform. If GoPro drives software innovation that solves pain points in video sharing, we think the company will be able to maintain premium pricing and significantly expand its addressable market. If a third party were to lead in such developments, we think the POV camcorder will commoditize rapidly.”
Overall, James Faucette has an 80% success rate recommending stocks and a +14.3% average return per recommendation.
Similarly on February 6th, Piper Jaffray analyst Sean Naughton reiterated a Neutral rating on GoPro and cut his price target from $90 to $55 following the company’s Q4 earnings. Despite having a stellar Q4, the analyst believes “[GoPro’s] stock reaction looks to be more driven by Q1 guidance that was more lackluster and the resignation of COO Nina Richardson.” With that said, Naughton thinks GoPro “shares have an opportunity to increase from the $46 in the after-market.”
Sean Naughton currently has an overall success rate of 62% recommending stocks and a +6.3% average return per recommendation.
On the other hand, Wedbush analyst Michael Pachter is slightly more bullish on GoPro, who reiterated an Outperform rating on the stock with a price target of $70 on February 4th, ahead of earnings. The analyst believes GoPro has a “clear path to continued growth” for 2015.
Overall, Michael Pachter has a 44% success rate recommending stocks and a +0.2% average return per recommendation.