GoPro Inc Q3 Earnings Preview: Bearish Sentiment Could Work In Its Favor

GoPro Inc Q3 Earnings Preview: Bearish Sentiment Could Work In Its Favor

Action camera maker GoPro is set to report its fiscal third-quarter results on Wednesday, Oct.28 after the market close. The stock has declined more than 53% in the last three months due to the not-so-strong traction of its products. However, GoPro has exceeded Wall Street expectations in every quarter since going public last year. Will GoPro beat analysts’ projections this time?

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GoPro’s Q3 revenue expected to jump 55%

Analysts on average expect the San Mateo-based company’s Q3 sales to jump 55% YoY to $433 million. Earnings are estimated at 29 cents per share, up from 12 cents in the same quarter a year ago. GoPro had guided Q3 revenues between $430 million and $445 million with EPS between 29 cents and 32 cents, and gross margins of 46%. Analysts’ estimates are at the bottom end of the company’s projections. But JPMorgan analyst Paul Coster said in a research note last week that the exceedingly bearish sentiment on GoPro could work in favor of the company following Q3 results.

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Analysts have grown more cautious on GoPro in recent weeks. The company’s tiny Hero4 Session failed to meet expectations. Subsequently, GoPro had to drop its price by $100. Its best-selling cameras remain Hero4 Silver and Black editions that are over a year old. Pacific Crest Securities analyst Brad Erickson recently said his checks suggest that GoPro’s sell-through has been declining.

Analysts offer a grim Q4 forecast

Earlier this month, Morgan Stanley slashed its price objective on the stock from $62 to $35, citing disappointing sales of Hero4 Session. Even bigger concern is the holiday season sales. Holiday sales drive about 40% of the company’s revenue. This year, analysts expect GoPro’s Q4 revenue to rise only 9% over last year. That’s a disappointing estimate for a company that has registered above 50% growth in the past. Wall Street expects GoPro to bounce back next year, riding on the new product launches and drones.

GoPro shares jumped 2.62% to $28.97 at 10:29 AM EDT on Wednesday.

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