GoPro Inc (NASDAQ:GPRO) has certainly had its ups and downs in the short time since its initial public offering in late June. Now shares are receiving a boost from a very bullish analyst who has just initiated coverage on the company with an Outperform rating and a $60 per share price target, which represents a 63% premium over Monday’s closing price.
While some analysts are skeptical on GoPro’s strategy, JMP Securities analyst Alex Gauna thinks the camera maker will be able to successfully transform itself into a social network. The analyst predicts that over the next couple of years, the company will keep getting a greater share of the camera market.
But what he’s most excited about is GoPro’s YouTube channel, which he says carries great potential for ad revenue. This is where the comparison with Facebook Inc (NASDAQ:FB) comes in. He said it makes sense that investors are cautious on this part of the story because it isn’t “fully in view.” But he thinks that Facebook and others have set a precedent for “where the stock can work very well ahead of, and you want to own them ahead of, when their Internet advertising strategy kicks in.”
GoPro to follow the path of Facebook?
Facebook’s share price has hit triple its low price in 2012, so the question now is whether Gauna is right in thinking GoPro is heading for the same fate. He also pointed to Zillow Inc (NASDAQ:Z), another one in which investors decided it was OK to price in success they see in the future.
In this case, he thinks GoPro’s vision and plan for execution are “clear,” so he is “willing to give the benefit of the doubt that it can monetize the opportunity.” He noted that it is difficult to know when GoPro will be able to fully capitalize on its YouTube channel, telling The Wall Street Journal’s MoneyBeat that he would like to believe that he’s actually “being conservative” in his estimates.