Jefferies Starts GoPro (GPRO) at Buy, Analyst Sees Upside

Jefferies analyst Anna Glaessgen initiated research coverage on GoPro (NASDAQ: GPRO) at Buy with a price target of $12.00 per share.

The analyst praised the company for “impressive strategic realignment over the past ~1.5 years.” This pivot, coupled with the company’s offensive shift, should help push the model upside and multiple expansion higher.

“The rise of GoPro.com is a game changer: (1) it boasts much higher margins than retail channels (~500-600bps) and (2) we believe greater control of its distribution should enhance channel health and demand visibility. A rising mix of higher MSRP product (85% of '21 product sales >$400 MSRP, vs. 74% in '20) has helped unlock ASP as an increasingly important growth lever (+17% y/y in 2021), which we believe continues to have upside. That said, the company retains access to lower price points via older launches (which, importantly, minimizes dilutive brand impact),” Glaessgen said in a client note.

The analyst also sees attractive valuation.

“Importantly, significant upside to GPRO shares does not require a radical re-rating scenario; shares stand near trough multiples on a FY2 EV/EBITDA basis (since mid-2018), despite the co. boasting much healthier fundamentals and a strengthening executional track record. While acknowledging many stocks in the broader group screen 'cheap', the business turnaround is being overlooked at current levels, in our view. We believe key levers to achieving this expansion include GPRO progressing along the meet/beat/raise continuum and the Subscription model gaining share and greater awareness among investors,” Glaessgen added.

GoPro stock price is up 0.5% today.

By Senad Karaahmetovic | [email protected]

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