Update: GoPro Underwriters Release Reports

Jul.21.14 | About: GoPro (GPRO)


The release of underwriter reports were mixed, but led to GoPro popping in early trading.

I expected a short-term pop from these releases.

I previously discussed that this will provide a selling opportunity as it will trade downward from here with the looming share lock-up expiration coming.

GoPro's (NASDAQ:GPRO) quiet period has come to an end this morning and the brokerage firms from the underwriting syndicate were allowed to release their reports. The reports were mixed, but in aggregate were positive. The stock has subsequently popped nearly 5% this morning on the release.

Coverage has not been given yet from Raymond James (co-manager), MCS Capital Markets (co-manager) and Allen & Company (co-manager), however, it is soon expected. Below is the list of companies that have initiated coverage:

  • J.P. Morgan (book-runner) started as Overweight with a $51 price target
  • Citigroup (book-runner) started as Neutral
  • Barclays (book-runner) started as Equal Weight with a $45 price target
  • Stifel (co-manager) started as Hold
  • Baird (co-manager) started as Neutral and $43 price target
  • Piper Jaffray (co-manager) started as Overweight with $48 price target

GoPro does not have a competitive advantage in this niche, burgeoning industry. Margins have compressed each quarter, which is evidence of a lack of pricing power, with the deluge on competitors. However, analysts are clearly projecting extreme revenue and margin growth, with a PE ratio in the 80's and a price to sales ratio over 5. In a previous article, I wrote that the end of this quite period will provide the opportunity to sell, before the stock sells off as the share lock-up period nears. A more extensive analysis about GoPro's business model can be found in my previous article. Further, you can read about where I expect GoPro to trade in both the short and long term in this article.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.