$GPRO: Analyst Upgrades Rolling In

Update

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)

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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