Sunday, February 08, 2015 1:53:57 AM
GoPro investors could face bumpy road through MarchFont
10:32 AM ET 2/6/15 | MarketWatch
Real time quote.
By Jennifer Booton, MarketWatch
Lockup on 76.1 million GoPro shares will expire Feb. 17
NEW YORK (MarketWatch)--GoPro Inc. danced around the way it plans to monetize media, issued a below-consensus earnings per share outlook and said goodbye to its chief operating officer--but that isn't the main catalyst driving its stock lower on Friday, analysts say.
Shares of GoPro (GPRO) fell nearly 13% in recent trade after swinging sharply into the red after the company's earnings conference call late Thursday. They had initially been up more than 5% after the camera maker reported bigger-than-expected sales during the holidays.
The coming lockup expiration on 76.1 million GoPro shares is partly to blame. Wedbush Securities analyst Michael Pachter warned clients in a note on Friday that shares may continue to trade lower through a week or two after the lockup expires on Feb. 17.
Overall, analysts were cautiously optimistic on GoPro after the late-Thursday earnings call, with most maintaining their bullish ratings on the stock--which has more than doubled from its June IPO price--but warning investors of a potential roller coaster in the near term.
"This is going to get bumpy," said Pacific Crest analyst Brad Erickson.
J.P. Morgan Chase maintained an overweight rating and $70 price target on the stock, but predicted that the denominator in the P/E multiple would continue to move up, and that the stock would find institutional support. Pacific Crest maintained a sector perform rating on the stock, but didn't provide a price target, and Wedbush maintained an outperform rating but lowered its 12-month target to $70 from $98. The average rating and target is hold and $67.10, according to FactSet.
Pachter said he believes shares could level out starting in mid-March, especially if GoPro starts to deliver on its guidance. GoPro's first-quarter adjusted earnings- per-share outlook is between 15 cents and 17 cents a share on revenue of $330 million to $340 million. Revenue topped Wall Street's $325 million expectation, but earnings per share was below the Street's 17-cent estimate.
In a note to clients, J.P. Morgan Chase analyst Paul Coster blamed part of Friday's selloff on GoPro's outlook, saying "under-promising goes unrewarded."
Meanwhile, Wedbush's Pachter said he wasn't concerned about the seemingly amicable departure of COO Nina Richardson, but that her resignation was a surprise and was also likely playing a part in Friday's selloff.
"Certainly there is material for the skeptics," Coster said.
The San Mateo, Calif.-based company also skirted around questions regarding its plans to monetize media, saying it isn't a focus today despite announcing a partnership with Roku earlier Thursday and a streaming channel on the LG Smart TV app in January.
See Also: GoPro is building a media expire
"We believe management's commentary on its call around software development progress or media monetization potential was a net negative relative to sentiment," said Pacific Crest's Erickson. "And the COO's resignation didn't help."
-Jennifer Booton; 415-439-6400; AskNewswires@dowjones.com
> Dow Jones Newswires
February 06, 2015 10:32 ET (15:32 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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