This is an exciting time for action camera maker, GoPro, Inc. (GPRO - Analyst Report) . The company has just brought to market its first significant update to its flagship line of action cameras in two years — the new Hero5 Black camera and the smaller, cube-shaped Hero5 Session.
However, can the Hero5 lineup do what the outrageously successful Hero4 cameras did for GoPro?
At $399, the Hero5 is definitely more competitively priced relative to the previous generation. It boasts exciting features like a 12MP sensor, integrated waterproof casing, a three-mic system. This enables stereo recording and a bigger battery. The camera is also capable of 4K video capture at 30fps and has image stabilization pre-edit, which can ensure smooth footage at break-neck speeds.
Further, the Hero5 cameras can auto upload photos and videos to GoPro’s cloud-based subscription service Thus, the process of accessing, editing and sharing GoPro content gets simplified.
With the new line, GoPro is attempting to expand its user base. One feature that has proved challenging for the everyday user is the complexity of its former cameras. The Hero5, which comes with a 2-inch touchscreen on the back, and simple settings, goes a long way toward solving these concerns.
GoPro’s last action camera upgrade – the Hero4 – was hugely successful, and drove a spike in sales and record profits. However, the craze eventually died away and the company’s attempt at a new design – the Hero4 Session – faltered. GoPro has had a tough time of late, with ill-timed product missteps & delays, strategic pricing errors, and intense competition from Sony Corporation (SNE - Analyst Report) and China's Xiaomi.
However, the action camera maker has done a great job of clearing out channel inventory and streamlining its product portfolio. It has also taken huge strides in developing content distribution and software recently.
GoPro also launched its first drone recently – the quadcopter Karma – slated to go commercial on Oct 23. With Karma, GoPro is veering outside its core video-capturing devices and its success or failure is likely to shape the company’s immediate future.
We believe, as the first drone from an established brand with a huge, loyal fan base, Karma will draw huge attraction from consumers.This winter holiday season will be a test for consumers’ appetite for the new products and is likely to foretell the success of the new drone.
After three quarters of sharp year-over-year revenue declines, GoPro has finally created a product lineup that could potentially reverse the trend. The Hero5 is attractively priced ($100 less than the previous version at launch) and boasts several new, interesting features. It’s reasonable to assume that the new camera will spark interest. However, Karma seems more of a wild card. GoPro will have to contend with ample competition in that market, but again, GoPro has priced its drone very competitively, which should work in its favor.
GOPRO INC-A Price and Consensus
To sum up, GoPro is now armed with a more focused, integrated, and complete product portfolio, and has priced its products attractively. Further, the timing of the product releases will enable the company to capitalize on the upcoming holiday shopping season and carry the sales momentum ahead.
It will be quite interesting to track the stock in the coming weeks, as consumers absorb and decide whether Karma and Hero5 are good enough to change this action camera maker’s dwindling fortunes.
Stocks to Consider
Some other stocks in the same sector include Electronic Arts Inc. (EA - Analyst Report) and Hasbro Inc. (HAS - Analyst Report) .
Electronic Arts is an entertainment company with an impeccable earnings history, with average surprise of 32.2% over the trailing four quarters, beating estimates all through.
Hasbro is a worldwide leader in leisure time and entertainment products and services. The company has a striking earnings surprise history over the trailing four quarters, having beaten estimates in each of them, for an average of 18.8%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>