GoPro Inc May Have No Upside Left: Analyst

GoPro Inc (NASDAQ:GPRO) was on fire right after its initial public offering, but investor sentiment has since cooled. Pacific Crest Securities analysts initiated coverage of the action camera maker with a Sector Perform rating, saying that they don’t see any more room for upside right now.

Meanwhile a post on Bidness Etc highlights some interesting similarities between GoPro and 3D Systems Corporation (NYSE:DDD). So is the party over for GoPro?

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GoPro’s multi-session slump continues

Shares of GoPro peaked at less than $2 away from $100 a share earlier this month. In the last five trading days, the stock has trended downward.

This week GoPro shares were hit especially hard after it was reported that the company’s camera may have caused former racecar driver Michael Schumacher’s head injury late last year. He had been skiing with his father on Dec. 29 in the French Alps when he hit his head on a rock. A French journalist claimed that it wasn’t the rock which caused Schumacher’s critical head injury, but rather, the GoPro camera that had been mounted on his helmet.

GoPro has a “tremendous franchise,” but…

In his initiation report, analyst Brad Erickson of Pacific Crest said he thinks investors are already pricing in optimism not only for the current holiday shopping quarter but also for the company’s media monetization plans. He assigns a $73 per share price target to GoPro, assuming that the company sells over 10 million units by 2020 and sees $200 million in media revenue with operating margins of 25%.

The analyst likes GoPro’s brand, particularly its “supreme competitive positioning.” He sees steady growth ahead, both in the U.S. and abroad. He especially likes GoPro’s opportunities in Asia.

GoPro compared to 3D Systems

In his post on Bidness Etc, Troy Kuhn noted that GoPro’s stock price skyrocketed by more than 220% within just a few months of its debut on the NASDAQ. Within the same first five months of 3D Systems’ trading on the New York Stock Exchange, its share price had climbed by over 108%.

However, the party ended very soon for 3D Systems, as shares toppled by more than 32% in February. It didn’t take long for the stock to rebound though, as shares climbed by more than 25%, but that was the last significant rally 3D Systems has seen, and now shares remain down by nearly 60% from their 52-week high.

He pointed out that 3D Systems’ stock chart followed one of the most easily recognizable and most bearish patterns known on Wall Street: the declining head and shoulders.

So will GoPro follow 3D Systems’ fate? That remains to be seen, but it doesn’t look good. Kuhn laid GoPro’s stock chart over 3D Systems’ chart and noted the similarities in the movements. If the chart follows the same pattern, GoPro may be on a very slippery slope.