Shares of GoPro Inc. turned three-year high on Friday, after swinging to a third-quarter profit on revenue by the wearable action camera manufacturer that more than doubled Wall Street expectations by a wide margin Beat.
Analyst Andrew Urkwitz at Oppenheimer raised his stock price target by 25% from $ 8 to $ 10, and said GoPro’s strategic shift to a more direct-to-consumer (DTC) and subscription model execution, which is now Was declared in two quarters. , Has been “remarkable”. He had reiterated the outperform rating on the stock for at least the past two years.
“As execution continues and confidence grows in an abundance of sustainable cash flow, we believe that a note to customers is written,” Uerkwitz said.
To trade above the $ 8 mark for the first time since December 2017, with a 24.2% gain in morning trading. It has now grown to 89.4% year on year, increasing GoPro’s market capitalization to $ 1.30 billion.
In comparison, the Nasdaq Composite Comp,
32.0% this year and the S&P 500 Index SPX,
There is an increase of 8.5%.
The company reported late Thursday night net income of $ 3.3 million, or 2 cents per share, after a loss of $ 74.8 million, or 51 cents per share, in the same period a year earlier. Excluding non-recurring items, GoPro adjusted adjusted earnings per share of 20 cents from a loss per share of 42 cents, beating the FactSet EPS consensus of 6 cents.
“In Q3 2020, our direct-to-consumer and subscription-focused strategy expanded margins, increased customers and significantly reduced our operating expenses, resulting in GAAP and non-GAAP profitability,” Chief Financial Officer Brian McGee said. “This approach is also enabling efficient working capital management, as we drove [days sales outstanding] Gradually down 25%, reduced channel inventory and reduced our own investment in inventory. “(GAAP refers to generally accepted accounting principles and non-GAAP adjusted income.)
Revenue climbed 113.9% to $ 280.5 million, which is above the FactSet consensus of $ 234.5 million. The number of subscribers increased by 65% to 501,000.
Gross margin improved to 35.4% from 21.7%, with the average selling price rising 11% to $ 304.
Founder and Chief Executive Nicholas Woodman said, “GoPro was strong from beginning to end, culminating with the successful launch of our stunning new flagship, the HERO9 Black.”
WebSh analyst Michael Pachter raised his stock price target from $ 6 to $ 8, as the results showed that the company’s strategic shift was going smoothly. He reiterated a neutral rating imposed on the stock later than in January 2018, however, citing valuations.
Paul Belden of JP Morgan reiterated its neutral rating and aimed for its stock price at $ 8, but was also upbeat about GoPro’s strategic shift.
“A change in subscription service provides greater visibility at customer locations, more consistent cash flow, and a good opportunity for upside accessories and camera upgrades in the future,” Beldon wrote.