GoPro Inc: Wedbush Bullish Ahead Of Q4 Earnings

GoPro Inc: Wedbush Bullish Ahead Of Q4 Earnings

Wedbush expects the company to report $600 million in sales and $0.70 in EPS

GoPro will report its fiscal Q4 and full-year 2014 results on Thursday, February 5 after the market close. Ahead of earnings, Wedbush analyst Michael Pachter reiterated his Outperform rating on the stock with $98 price target. He is not the only one expecting GoPro to post strong quarterly results, though. Oppenheimer analyst Andrew Uerkwitz and JPMorgan analyst Paul Coster also forecast solid results.

GoPro enjoying the benefit of free viral marketing

Pachter said in a research note that even though its action cameras are pricier than competitors‘, GoPro is enjoying the benefit of free viral marketing. The company also has an expanding addressable market. GoPro’s strong brand helps it command premium pricing for most of its products. In the past few months, the San Mateo-based company has seen rising competition as more players enter the action camera market.

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But Wedbush said GoPro has a “clear path to continued growth” for at least the next year. Demand for the company’s affordable cameras led the holiday sales. But it is unlikely to affect its margins because of the new Hero4 Black, which costs $100 more than its predecessor, says Pachter. He expects the company to report $600 million in sales and $0.70 in EPS.

GoPro likely sold 2.25 million units in Q4

On average, Wall Street calls for 70 cents in earnings with $580.33 million in sales. The consensus EPS estimate has gone up by 23% in the past 90 days, while revenue guidance has jumped by 15%. GoPro’s own guidance calls for $550-$580 million in sales and 65-69 cents in earnings. For full-year 2014, analysts expect the company to report $1.34 billion in sales and $1.02 a share in earnings.

Pachter believes GoPro shipped at least 2.25 million units in the December quarter, well above Wedbush’s estimate of 1.92 million units. He said even if the average revenue per unit remains constant at $257 from Q3, it would allow the company to exceed the high end of its guidance. However, the average price could go up due to the Hero4 Black, which sells for $499.

GoPro shares fell 3.76% to $52.52 at 9:51 AM EST on Wednesday.

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