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GoPro Rolls Out Entry-Level HERO Camera, Expands Portfolio

Zacks Equity Research
Updated

GoPro Inc. GPRO recently introduced an entry-level HERO camera that is designed to capture impressive videos and pictures. The new camera will enable users to share experiences that are difficult to get through a phone. It is available with retailers across the world and on GoPro.com for $199.99.

Featuring a 2-inch touch display, the camera is waterproof up to 30 feet. This makes it extremely durable and ideal for kids, adventurous social sharers and travelers. Also, the device can offload photos and videos to the GoPro app, which in turn relieves users from plugging it into a computer. An impressive image quality, voice controls, video stabilization as well as its compatibleness with 30+ GoPro mounting accessories are the other notable features of HERO camera.

However, the camera doesn't shoot 4K, which makes it GoPro’s first product release since 2015 to lack that resolution. The company’s target audience seems to be kids, adventurous social sharers and travelers.

Our Take

Of late, GoPro’s operations have been strained due to multiple layoffs, operational stumbles, decaying fundamentals as well as a bad track record of missing targets. Moreover, the highly competitive cameras and camcorders market have threatened the company’s market share. Particularly, the availability of lower-cost alternatives from established industry players along with new entrants have pushed up the level of competition a notch higher. Not surprisingly, in the past six months, this Zacks Rank #5 (Strong Sell) stock has lost a massive 56.8% against the industry’s rally of 16.6%.

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Furthermore, despite strong marketing support for key products, the company’s top-line performance has been adversely impacted by price reductions. For instance, in 2017, the company had to slash prices for the Hero 5 Black and Hero 5 Session cameras. It also cut the price of the HERO 6 Black camera. Such constrained demand and price cuts might impact the top line in the coming quarters as well. This apart, high product concentration risk, supply chain disruptions and production delays are likely to affect the company’s performance going forward.

Furthermore, the company recently decided to shut down its drone business on account of tough competition and a hostile regulatory environment in Europe and the United States. Also, the company continues to spend a significant amount on research & development (R&D), which will likely put pressure on margins.

Stocks to Consider

Some better-ranked stocks from the same space are Sony Corporation SNE, Dolby Laboratories DLB and AMC Networks Inc. AMCX. While Sony sports a Zacks Rank #1 (Strong Buy), Dolby and AMC Networks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sony surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 79.8%.

Dolby outpaced estimates in the trailing four quarters, with an average earnings surprise of 54.8%.

AMC Networks outpaced estimates in the trailing four quarters, with an average earnings surprise of 24.3%.

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Sony Corporation (SNE) : Free Stock Analysis Report
 
Dolby Laboratories (DLB) : Free Stock Analysis Report
 
AMC Networks Inc. (AMCX) : Free Stock Analysis Report
 
GoPro, Inc. (GPRO) : Free Stock Analysis Report
 
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Zacks Investment Research