The GoPro 'Show Me' Story Continues

GoPro Inc GPRO reported another quarterly miss and announced disappointing guidance. While 2016 was expected to be a turnaround year, now 2017 seems to be “another rebuilding year” and the company continues to be a “show me story,” Barclays’ Joseph Wolf said in a report. He maintains an Equal-Weight rating on the company, with a price target of $10.

What Plagues GoPro

The production holdup issue related to the new HERO 5 product line extended from Q3 into Q4. Inventory re-ramp was unable to keep pace with demand, leading to retailers “pulling back sales support during the critical holiday season, even after channeling resumed,” analyst Wolf mentioned.

GoPro announced its Q1 guidance significantly short of expectations. Revenue guidance came in at $190 million–$210 million, well below Barclays’ estimate of $273 million. “Whereas management had previously targeted double-digit revenue growth in 2017, they have walked back from his specific target given the lack of visibility,” Wolf wrote.

Positives

The analyst mentioned the following positives for GoPro:

• Demand for the HERO 5 product line remains strong.
• The company is intensifying its cost-cutting efforts and has lowered its 2017 operating expense guidance to $600 million, below Barclays’ estimate of $650 million. GoPro has rolled out Karma again and may report modest Karma sales in 2017,
• Efforts at GoPro Plus, a cloud-based trial-to-subscription service, seem to be more focused on driving user engagement than revenue generation.
• International growth opportunities could be significant.

At last check in Friday's pre-market session, shares of GoPro were down 11.12 percent at $9.75.