GoPro stock has rallied more than 20% in the last three months. Even though the company has announced some major plans over the past few weeks to expand its addressable market and sustain rapid growth, some on the Wall Street remain skeptical about the stock. So, AtonRa Partners performed a DCF valuation of GoPro to assess the risk/reward ratio.

GoPro

The bull vs bear case

In the bull case, AtonRa Partners used a 10.1% discount rate, and assumed that GoPro’s revenue would continue to grow above 20% through 2018. Revenue growth would moderate afterwards, reaching $9.2 billion in 2025 and still growing at a healthy rate of 8%. The research firm further assumed that the non-GAAP EBITDA reaches the high-end of GoPro’s long-term target range of 21% to 23%.

Based on these assumptions, the discounted cash flow (DCF) method points to a $71 valuation. That’s approximately 30% upside from the current levels. In the bear case, AtonRa Partners assumed a 10.1% discount rate and organic revenue growth above 20% through 2016. Revenue growth moderates gradually, reaching $6.7 billion by 2025, while non-GAAP EBITDA margin stands at the lower end of the company’s long-term target of 21% to 23%.

GoPro heading upward?

In that case, DCF method yields a valuation of $45, suggesting a 20% downside from current levels. Given recent developments at GoPro, the stock seems to be headed upward rather than downward, Barclays analyst Joseph Wolf said earlier this week. The research firm upgraded the stock from Equal-weight to Overweight rating and upped its price objective from $50 to $65.

Wolf said GoPro’s new products, recent hires, and solid execution had turned his “skepticism into optimism.” The San Mateo-based company has launched its smallest action camera Hero4 Session that went for sale on July 12th. GoPro has also hired Charlotte Koh, the former head of Hulu’s original content initiatives, to push further into the media business. What’s more, Toyota has teamed up with GoPro for its redesigned Tacoma pickup truck. The revamped Tacoma will sport a GoPro camera mount as a standard feature.

GoPro shares rose 0.18% to $54.59 at 10:48 AM EDT on Thursday.