) surged a strong 13% yesterday after
JMP Group Inc
) initiated coverage on the stock with an outperform rating and a
target price of $60 (almost 150% premium to its IPO offer price of
GoPro is a portable video camera maker offering cameras that can
be attached to moving objects or even people. These cameras are
specially used by sportsmen or sky divers to capture intricate
details of a sporting episode.
Reasons Behind Positive Coverage
Analysts at investment banking and asset management services
firm JMP believe that GoPro has huge market potential in an
industry which is valued at approximately $70 billion. Furthermore,
they expect strong revenues at its Media division as according to
its latest filing, GoPro's videos have fetched 50 million hours of
viewership in 2013. This can be monetized to generate revenues to
compensate for any deterioration in camera sales as a result of
growing competition or otherwise.
The company has already created a GoPro channel for
) Xbox and Youtube. If the strategy takes off, GoPro would be in a
good position to garner advertising revenues.
Further, the analysts believe that GoPro enjoys a first mover's
advantage in the high definition portable cameras market and its
extensive portfolio of cameras will help it counter intensifying
competition from new entrants.
There are some risks, however, given stiff competition in the
wearable cameras segment from large firms like
). The initial promos of Google Glass promise enhanced portability
of video cameras and low prices once full-fledged retail marketing
The day before JMP initiated its coverage, shares of GoPro fell
5% as Barron's provided an uncertain outlook on GoPro's long-term
growth. Analysts at Barron's believe that smart phones offer
multiple features and are also very convenient. Thus, the analysts
apprehend that it won't be long before Smartphone manufacturers
integrate this feature into mobile gadgets.
Traditional camera makers like Canon, Nikon and Polaroid that
have the resources and brand power to expand into the segment could
also increase competition for GoPro.
Seperately, a venture capital firm provided a sell rating on
GoPro with a target price of $28.50 last Thursday, which sent the
shares down 7.3% on the following day. The negative outlook was
based on GoPro's competitive concerns.
GoPro shares have had a bumpy ride since its IPO on Jun 26,
2014. Considering all the positive and negative reviews, we can
conclude that investors need to be careful before trading in GoPro
GoPro currently has a Zacks Rank #3 (Hold).
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