GoPro shares rallied 6.23% to $50.29 on Wednesday after Oppenheimer analyst Andrew Uerkwitz said in a research note that he expected the company to beat fourth-quarter Wall Street estimates. The action camera maker is scheduled to release its Q4 results on February 5 after the market close. GoPro cameras, especially the latest Hero4 series, were go-to gifts during the holiday season.
2015 to be a tough year for GoPro
Uerkwitz said the popularity of GoPro’s action cameras during the holiday quarter will lead to a revenue and earnings beat. However, the research firm reiterated its Underperform rating on the stock with $45 price objective. Uerkwitz said that 2015 will be a “tough” year for GoPro to deliver the similar growth rate as last year. Competition in the U.S. action camera market continues to increase.
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HTC, Sony and Panasonic have stepped up competition by rolling out their action cameras. Further, Oppenheimer fears that the wearable camera market may be getting saturated. Besides the market size, another factor that would affect GoPro’s valuation is how fast it can monetize content. Global Equities analyst Trip Chowdhry recently said in a research note that it would be extremely difficult for GoPro to monetize videos. That’s because most of the content is user-generated, and not owned by GoPro.
GoPro has beaten estimates twice
GoPro has guided fourth-quarter earnings of 65-69 cents a share, well below the consensus estimate of 70 cents. It forecasts Q4 revenue to come in between $550 million and $580 million, lower than analysts’ average projection of $581.9 million. The San Mateo-based company has exceeded analysts’ estimates in both quarterly results it has announced after going public.
Separately, GoPro was awarded a new patent for an “ornamental camera design” by the U.S. Patent and Trademark Office on Wednesday. Filed in September 2014, the patent lists GoPro founder and CEO Nick Woodman as one of the inventors. However, it’s still unclear whether the new patented design will be used in the future products.
GoPro stock rose 1.15% to $50.87 in pre-market trading Thursday.