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GoPro Inc (GPRO): Analysts Optimistic Despite Falling Share Price

By Howard Kim

GoPro Inc (NASDAQ:GPRO), the maker of wearable cameras, has experienced a strong dip in its share price over the past three months. The company went public in June 2014 at $24 per share, and quickly reached a high of $100. However, presently the stock is trading at $32.04. Two analysts have rated GoPro in light of the company’s disappointing recent performance.

On September 23, Robert Stone from Cowen & Co. reiterated his Outperform rating on the stock, but lowered his price target to $60 (from $76). Stone also stated that concerns about other competing products on the market are exaggerated because GoPros remain top-ranked on sites like Amazon and BestBuy.

Talking about the valuations, Stone said, “GPRO now trades a touch over 15x our 2016E EPS, vs. ~26x when we initiated on 8/13/15.” He continued to note that his current pricing factors in weaker-than-expected performance of the HERO4 Session (the company’s latest waterproof camera model). Stone added, “Our new $60 PT (vs. prior $76) reflects a higher discount rate in our DCF.”

On the same date, Paul Coster from JP Morgan maintained an Overweight rating on the stock with a price target of $75. Referring to the appearance of GoPro CEO, Nick Woodman, on CNBC, Coster said, “[Woodman] sounded constructive regarding GoPro’s prospects heading into the holiday season, hinting at the possibility of a new product introduction beforehand (not priced into the stock).”

Coster is optimistic that GoPro will achieve EPS growth of 40% in 2015. He also suggested a possible upside to his 2016 forecast of around 14% EPS growth, depending on the firm’s success in launching the quadcopter product in Q116, or in increasing media revenues over the next year. In May of this year, the GoPro announced its plans to enter the growing drone sector with its quadcopter product. Coster concluded, “We recommend purchase of this multi-dimensional growth story at what we consider a very reasonable price.”

The views of Robert Stone and Paul Coster are similar to a majority of the 16 analysts polled by TipRanks. Of the total analysts, 12 have recommended GoPro as a Buy while 4 have given a Hold rating. Based on the price targets given by the 16 analysts over the past 3 months, the average price target for GoPro is $71.23, marking a 112% potential upside from current levels.