GoPro Makes The Hard Choices; Will It Lead To Top-line Growth?

Shares of GoPro Inc GPRO gained more than 15 percent after the company detailed a game-plan to achieve profitability, which includes a re-focus on its core products and eliminating more than 200 jobs to save on costs. Now the pressure is on GoPro to show investors that its hard choices can translate to top-line growth.

Joseph Wolf of Barclays commented in a report GoPro said double-digit revenue growth remains a key objective in 2017, but investors naturally have concerns over this objective given the somewhat limited total addressable market.

Wolf noted GoPro's stock has fallen by about one-third since its earning report on February 3, but this decline already "underscores these risks." Nevertheless, GoPro remains focused on introducing new products over the bottom half of 2017 and focusing on sales of its drone product called Karma, which was re-launched in early February after a disastrous start.

$10 Price Target Remains

Wolf also noted that GoPro's headcount reduction won't impede sales growth or product development efforts and appears to be related to all of the non-core spending since the company's initial public offering.

Perhaps more important is the fact that the analyst was already projecting GoPro to achieve a double-digit revenue growth in both 2017 and 2018. As such, the analyst's revenue estimates remain unchanged at $1.322 billion in 2017 and $1.475 billion in 2018.

But the lower expense did prompt the analyst to boost his earnings per share outlook to $0.15 per share in 2017 (versus a prior loss of $0.43 per share) and $0.43 per share in 2018 (versus a prior loss of $0.27 per share).

Shares remain Equal Weight rated with a $10 price target.

See Also:

GoPro Positioning For Profitability Via Cost-Cutting, But Baird Remains Underperform

The GoPro 'Show Me' Story Continues