GoPro (GPRO) Stock Soars on JPMorgan Recommendation


GoPro is having an incredibly strong day in the market today, and for good reason. Early this morning, JPMorgan released an analyst update on the stock. Obviously, this update was overwhelmingly positive. Today, we’ll talk about the update, how the stock reacted to the news, and what I’m expecting to see from GPRO moving forward. So, let’s get right to it…

JPMorgan Reiterates GPRO Buy Recommendation

As mentioned above, GoPro is having an incredible time in the market during today’s trading session. The company was the target of an analyst update from JPMorgan’s Paul Coster. During the update, Coster reiterated the “Overweight” rating on the stock with a price target of $17 per share. The analyst said that despite recent sales struggles, GPRO is looking good going into the new product cycle. Here’s what he had to offer…

We expect GoPro to post 2Q results that meet or beat low expectations, to reiterate full year revenue guidance, and to provide constructive commentary regarding introduction of the next Hero product family, shipments of which should start in late September… We therefore expect an earnings inflection in 4Q16, so an earlier return to net profit in 3Q would be a positive surprise.

We think GPRO can work as a trade on the long side heading into 2H, spurred by Omni, Karma and Hero5 product introductions, but sustainable appreciation will depend on whether the new product features and pricing can potentially reactivate y/y sales growth; and year-round profitabiliy; unfortunately the 2Q call is unlikely to be the forum in which new product details are released. That said, we like the set-up here, against elevated investor skepticism 936% of the float is short) and recommend buying GPRO in the 2Q print.”

How The Market Reacted To The News

As investors, one of the first things that we learn is that the news moves the market. Any time positive news is offered with regard to a publicly traded company, we can expect to see gains in the stock associated with the news. Adversely, when negative news is released, we can expect to see declines. In this particular case, the news was overwhelmingly positive. As a result, we’re seeing gains in the value of GoPro stock today. Currently (3:06), the stock is trading at $11.40 per share after a gain of $0.51 per share or 4.63% thus far today.

What We Can Expect To See Moving Forward

I have a relatively bearish opinion of what we can expect to see from GPRO moving forward. I will admit that as I see more and more positive opinions on the stock, it’s hard to ignore the validity of statements made. However, there’s still one big factor that has yet to be addressed. GoPro’s products are high end action cameras. They can be mounted on drones, sure, but the drone market has plenty of high end cameras. Not to mention the fact that the market has spoken and the audience for action cameras is a relatively small one. Here’s the deal for me. I like the product, I even own one. However, most people aren’t going to spend hundreds of dollars on a camera that they can mount on their helmet or kayak. At the end of the day, the company is great, the product is great, but the audience is just too small to make this a strong long run investment.

What Do You Think?

Where do you think GPRO is headed moving forward and why? Join the discussion in the comments below!