GoPro Inc (NASDAQ:GPRO) shares have shot up about 129% from their IPO price of $24 in less than three months. The high-end action camera maker went public on June 25. Exponential rise in its valuation prompted JPMorgan analyst Paul Coster to downgrade the stock from Overweight to Neutral rating. In a research note dated September 4, Coster reiterated the price target of $51.
GoPro’s fundamentals remain solid
The research firm said GoPro’s fundamentals remain strong. JPMorgan hasn’t changed its EPS estimates for the current or next year. JPMorgan expects the company to generate 73 cents in earnings this year and 97 cents in calendar year 2015. What’s more, Coster recommends clients not to sell their holdings amid expectations of new product launches ahead of the holiday season.
Recent comments from video processing company Ambarella Inc (NASDAQ:AMBA) and contract manufacturing firm Chicony Electronics Co., Ltd. (TPE:2385) suggest that GoPro would see strong growth in the holiday quarter. However, their comments don’t indicate whether GoPro is going to launch a new camera in coming weeks. JPMorgan’s price target on the stock is based on 60x CY2015 proforma EPS.
GoPro’s new camera will convince enthusiasts to pay a premium
In a separate note, Piper Jaffray analyst Sean Naughton reiterated his Overweight rating on GoPro and raised the price target from $48 to $60. Piper Jaffray’s price target reflects 13.4% upside potential. GoPro has sold more than 8.5 million cameras since 2009. Investors and analysts have long been expecting the company to launch its next camera. Multiple rumored release dates have passed by, without any sign of a new camera.
Earlier this week, Stifel analyst Jim Duffy said GoPro’s new camera will convince high-tech savvy newcomers to pay a premium and encourage enthusiasts to upgrade. Rumors suggest that the company may unveil its new camera next month. But Duffy believes a Q1, 2015 release is more likely. Demand remains strong for GoPro camera. Stifel’s recent checks suggest that the San Mateo-based company’s inventory levels were “managed very tight” during the second quarter.
GoPro shares soared 4.74% to $55.60 at 12:58 PM EDT on Friday.