GoPro, Inc. Q3 2017 Earnings Preview: Short Squeeze Warning

GoPro, Inc. (GPRO) Q3 2017 earnings are set for release on Wednesday after closing bell, and Wall Street is looking for 2 cents per share in earnings on $312.6 million in sales from the camera maker. In last year’s third quarter, GoPro reported losses of 60 cents per share on $240.6 million in sales.

Image Source: GoPro Press Kit

GoPro Q3 2017 earnings

Wedbush analyst Alicia Reese bumped up her price target for the company going into the GoPro Q3 2017 earnings release. Her new target for GoPro stock is $10.50 per share, up from $10, and she maintains her Neutral rating.

She said in her recent note that the company’s strong performance in the first three quarters of the year makes her more confident that it can return to profitability, but past execution and supply problems keep her skeptical. Nonetheless, she praised GoPro management for turning things around by improving inventory management and controlling costs better.

She said early orders for the HERO6 have definitely been strong, and she believes that the camera maker’s core customers are probably upgrading because of the big bumps in specs. She had previously questioned whether the camera would have “mass appeal” versus the previous models, but her firm’s channel checks suggested better-than-anticipated performance for the HERO6, even as demand for the HERO5 remains strong.

GoPro expected to post strong results

As a result, she is confident that the GoPro Q3 2017 earnings report will reveal sales that are toward the high end of the company’s guidance. GoPro announced last month that its revenue will come in toward the high end of its guidance range of $290 million to $310 million.

Reese is looking for $325 million in sales and earnings of 5 cents per share, both of which are above consensus. She estimates the gross margin at 38.4%, compared to the guidance range of 36% to 38%, and a 12% increase in HERO units shipped with a 12% increase in revenue per unit. Her checks indicate that early HERO6 demand has been strong with little to no drop-off in HERO5 demand.