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$GPRO: Analyst Upgrades Rolling In

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$GPRO: Analyst Upgrades Rolling In

Update

Antonio Linares
Nov 18, 2021
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$GPRO: Analyst Upgrades Rolling In

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Note: this is an update to my deep dive on $GPRO.

We are Heading Towards 25$+ per Share

As $GPRO´s fundamentals continue to improve, the company still has a long way to go in terms of pushing through layers of stigmatized perception in the market. For most, GoPro is still a story about failure. Recently, however, we have seen a number of analysts / firms upgrading the stock:

  1. Morgan Stanley upgraded the stock from underweight to equal weight last Thursday, stating that “it´s clear that the execution has improved”.

  2. Today, JP Morgan has upgraded the stock from neutral to overweight, with a price target of 15$. Analyst Paul Chung states says the company's "strong execution" is underscored by its pivot to direct-to-consumer, high subscriber attach rate on GoPro.com and price increases. These are driving GoPro's margins structurally higher, increasing revenue visibility, and "smoothing out" sales over the longer term, Chung tells investors in a research note. The analyst also views GoPro as a "reopening play" as the world opens back up. (source)

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Qualitatively, I believe these upgrades are a meaningful advancement for $GPRO in terms of leaving its recent past behind, in the eyes of the broader market. These are well established institutions that I imagine must have been considerably vexed by the decline in share price $GPRO has seen since 2014. Them coming out and praising $GPRO´s advancements means we are now much closer to the market acknowledging $GPRO´s turnaround. As you know, I consider the stock´s fair value today to be in the 25-30$ range. With an estimated EPS of 0.83 for FY2021, applying the NASDAQ 100 average PE ratio of around 30, the 25-30$ range is not far fetched. In today´s market, it may not take very long to fill this gap. As sentiment continues to evolve, I would not be surprised to see the market suddenly go from being dismissive to being excited about the turnaround. We are also entering $GPRO´s historically best quarter, with the world opening back up (with some speed bumps here and there).

Stay tuned for more updates and as always, follow the fundamentals 👁️.


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Disclosure

These are opinions only of the individual author. The contents of this piece do not contain investment advice and the information provided is for educational purposes only and no discussions constitute an offer to sell or the solicitation of an offer to buy any securities of any company. All content is purely subjective and you should do your own due diligence.
Antonio Linares makes no representation, warranty or undertaking, express or implied, as to the accuracy, reliability, completeness or reasonableness of the information contained in the piece. Any assumptions, opinions and estimates expressed in the piece constitute judgments of the author as of the date thereof and are subject to change without notice. Any projections contained in the Information are based on a number of assumptions as to market conditions and there can be no guarantee that any projected outcomes will be achieved. Antonio Linares does not accept any liability for any direct, consequential or other loss arising from reliance on the contents of this presentation. Antonio Linares is not acting as your financial, legal, accounting, tax or other adviser or in any fiduciary capacity.
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$GPRO: Analyst Upgrades Rolling In

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2 Comments
Babak
Jan 17, 2022

What kind of multiple would you assign to the digital subscription business? Arr rev x?

Based on Q3 figures 1.34M subs deduct quik app subs of 168K = 1,172,00 x50= 58,600,000 M USD ARR.

Quik App subs 168,000 x 9.99 = 1,678,320M USD ARR + 58,600,000 = 60,278,320 M USD combined ARR. Multiple of 5-6x?

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