One Reason GoPro (GPRO) Stock Is Tumbling Today
NEW YORK (TheStreet) -- GoPro (GPRO) - Get Report stock is falling by 7.02% to $19.41 in late morning trading on Wednesday, as Piper Jaffray reiterates its "underweight" rating and cuts its price target to $15 from $20 on the stock this morning.
The firm also lowered its full-year fiscal 2016 per-share earnings forecast to $1.03 from $1.35.
Piper Jaffray is concerned that the product's lowered pricing on Amazon.com (AMZN) and the fact that GoPro has been listed on flash sales sites such as Zulily (ZU), Groupon (GRPN) and RueLaLa could pressure gross margin.
"We are becoming increasingly concerned the company will face a difficult time maintaining current margin expectations as selective price reductions are becoming more evident," the firm said in an analyst note.
GoPro's Session product's price on Amazon.com was reduced to $299 from $399, and its HERO and HERO4 Silver are the only two of the company's products that remain on Amazon.com's Top 100 list, Piper Jaffray adds.
The average ranking of GoPro products fell to 80th so far in the fourth quarter, compared to 73rd in the third quarter and 52nd in the second quarter, according to the firm.
Separately, TheStreet Ratings team rates GOPRO INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate GOPRO INC (GPRO) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GPRO's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 69.88%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- Net operating cash flow has significantly decreased to $4.62 million or 90.16% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Household Durables industry average, but is greater than that of the S&P 500. The net income increased by 28.6% when compared to the same quarter one year prior, rising from $14.62 million to $18.80 million.
- 48.51% is the gross profit margin for GOPRO INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 4.69% trails the industry average.
- GPRO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, GPRO has a quick ratio of 1.83, which demonstrates the ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: GPRO
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.