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GoPro: Rally To Continue On Potential 9% Revenue Upside In FY16


Despite the launch of the HERO5, the Street expects only 10% growth year-on-year in the camera segment in the second half.

This points to almost no growth compared to the second half of 2014 when GoPro shipped the HERO4, while management stated the HERO5 will be GoPro's biggest camera launch ever.

We do the math and get to more than $1,500m revenue this year in our base case, slightly above the high-end of the guidance and 9% above consensus.

GoPro's (NASDAQ:GPRO) recent earnings were arguably encouraging as they pointed to improving ASPs (thanks to the elimination of entry-level products) and to a clean distribution channel ahead of the holiday season (inventory decreased 59% year-on-year and 36% quarter-on-quarter). But, in our view, the confirmation by management that the Karma drone would ship in time for the holiday season and that retailers' interest in the company's Karma and HERO5 products was strong was much more important.

While the stock has surged following the earnings report, we believe the rerating potential still remains significant as consensus expectations for the full year remain on the conservative side. The Street is currently standing at the low-end of GoPro's unchanged FY16 revenue...