MORGAN STANLEY: GoPro's new tiny camera is a flop -- we're hacking our price target

Morgan Stanley analysts think GoPro’s latest camera was a flop.

The company launched the Hero4 Session in July, touting it as its most compact and most convenient camera yet.

But according to Morgan Stanley’s James Faucette and team, the camera has been a hard sell.

The analysts cut their price target on the stock to $US35 from $US62, nearly 50%, with an “equal-weight” rating on the stock.

They wrote:

“Following up, our most recent checks were decidedly more negative as customers prefer the Silver’s LCD screen and superior video quality over the Session’s smaller form factor. Commentary by management at recent investor events confirm that Session has been a difficult sell at the same price point of its historically favourite HERO4 Silver model. Disappointing demand culminated in GoPro announcing its decision to reduce the price to $US299 last week, a $US100 discount from the $US399 price point when the product was launched in July.”

A major concern for analysts about GoPro has been whether its cameras can break out of their core user base of geeky early adopters and adventure sports enthusiasts.

Faucette also wrote that GoPro’s recently launched video editing app is not as good as existing software on iOS and Android. And, if the company does not innovate quickly enough, people would continue to use their smartphones for video capture and editing, instead of getting a GoPro camera.

The stock fell 2% in premarket trading to around $US29.90 a share.

Last month, Barron’s forecast that the stock price could plunge further, to $US25 a share. The magazine’s analysts were concerned about GoPro’s ability to beat the competition, as new phones are constantly being released with upgraded cameras.

The stock is off 51% year-to-date, and 65% over the past 12 months.

Here’s its lifetime since the IPO in June 2014.

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