Hero Discounts: A Negative GoPro Signal?

In a report published Friday, analysts at Pacific Crest Securities reiterated their Sector Weight rating on GoPro Inc GPRO. The analysts expect the company to post a "beat and raise" quarters going forward, versus the estimates, driven by incremental international distribution.

Increasing international distribution is expected to be the largest contributor to upside in the forthcoming quarters. "While we anticipate strong quarterly results, we will be looking for signs of whether discounting is isolated or more systematic, which would fuel the bear case of commodization," the analysts said.

Related Link: Pachter: There's Only One GoPro

Best Buy Co Inc BBY is running a 7.5 percent in-store discount offer on Hero 4 Silver till May 2, although the analysts are unsure why Best Buy has not been advertising the offer to pull in more store traffic. While this one-off discounting is unlikely to have any material impact, further evidence of such discounting could fuel the case for bear's commoditization.

According to Pacific Crest, "We continue to believe the company left itself room to the upside in the March quarter in the event of solid sell-through. Given our checks through the quarter, we are comfortable with our above-consensus estimates."

The analysts believe that GoPro continues to hold a dominant market position.