GoPro Inc. (GPRO) Up on Expiration of IPO Lockup and Favorable Coverage
Founded in 2004, GoPro manufactures and sells sports cameras and related accessories.
Shares of San Mateo, California, based GoPro Inc. (GPRO) rose on Tuesday, on the expiration of a lockup tied to the initial public offering of the company. In addition, Northland Capital Markets initiated coverage of the stock on Tuesday with a buy recommendation. GoPro's stock reacted to the double dose of good news by climbing $5.65 per share, an increase of 12.48%, to close the day at 50.92. Trading volume on the day was 15,844,339 shares, or about twice the average daily volume for the stock.
Tuesday represented the expiration of the post-IPO lockup for some of GoPro's early investors. The lockup expiration date can also have a negative impact on a company's stock, since the release of a large number of shares can saturate the market and drive the price of the stock down. The news of the GoPro lockup expiration however was greeted with optimism by investors.
The expiration ended the lockup of 76 million shares, representing 61% of the company's outstanding shares. It was the result of the company's initial public offering launched in June of last year.
Northland Capital Markets also initiated coverage of GoPro's stock on Tuesday, giving the stock a buy recommendation. Northland Capital Market analyst, Gus Richard, described the lockup expiration as an "attractive entry point". He also added that the company's cameras are an "extremely well branded high-growth consumer franchise."
Richard issued a "outperform" recommendation on the stock, and gave a 12 month price target of $70 per share, representing an increase of nearly 40% over Tuesday's closing price. The consensus 12 month target price, compiled by Bloomberg, by 16 analysts who cover GoPro's stock, is $64.09.
Though the company has yet to reveal the official launch date, it is working on the roll out of its HERO5 camera, which will offer a battery life upgraded by more than 150%, and a high resolution, at an affordable price (in the $500 range). This will enable GoPro to offer unique camera devices which are projected to replace phones that have image capturing functionality.
Richard expects a continuation of GoPro's groundbreaking technology on various fronts, including the use of cameras in helmets and on drones, as well as camera phones. Richard's target price of $70 is based on 40 times the projection of 2016 adjusted earnings per share of $1.75.
Said Richard, "The company has strong brand recognition positioning it to benefit from the growth of digital video duration on social media. We initiate with an outperform rating and $70 price target".
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