GOLDMAN SACHS: We underestimated GoPro

Five months after placing GoPro on its “Americas Sell list,” Goldman Sachs is taking note of positive results from the action camera company and has upgraded its stock to neutral with a $US10 price target.

GoPro’s stock has risen more than 18% from its all-time low in March thanks to a solid second-quarter earnings report two weeks ago.

“While we continue to think sell-through and market saturation remain long term issues, we underestimated the company’s ability to improve its capital structure and liquidity position,” writes analyst Doug Clark. “We expect investor focus to shift to the upcoming product launch. We no longer have downside to consensus estimates in the near term, but short interest is still at 19% of shares outstanding.”

GoPro’s recalled-and-relaunched Karma drone may have been a bust, but new products are typically good news for the company’s bottom line, Clark notes. GoPro says its upcoming Hero 6 camera will fill a significant void by making it easier for users to move videos from their camera to their smartphone.

“Product launches have historically been a positive catalyst for the stock in the past, with outperformance vs. the S&P 500 both into and out of product launches,” writes Clark. “Further, the company will also launch its 360-degree Fusion camera into 2018, entering a high-end AR/VR device capture market.”

Shares of GoPro are up 2.16% at $US9.95 on Monday, but still have plenty of work to do in order to return to their 12-month high of $US17.68 from last fall.

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