GoPro Inc (NASDAQ:GPRO) is changing the way people view the world—literally. The company’s little cameras–known for their high-definition and durability–are becoming must-haves for extreme sports videography.
Understandably, GPRO stock, which is on the dip, has been the subject of much debate lately: Should you buy or sell? Well, here are a few reasons I think the stock is worth having:
GPRO’s Most Talked-About Rival Has Work to Do
Although there are a few competitors taking aim at GPRO, most analysts focus on Xiaomi, a Chinese company that recently introduced a $64 GoPro alternative, the Yi. It takes aim at GoPro’s Hero, which starts around $130.
But, consider this: unlike the Hero, the Yi has no waterproof housing or accessories. Another strike against the Yi is its lackluster picture quality. One reviewer described the camera itself as feeling like a toy and not as sturdy as the Hero.
Also, the Yi is only sold in China, whereas GoPro has expanded internationally, establishing a European sales and marketing headquarters in Germany and venturing into China by developing ties with two of the country’s largest retailers.
GPRO Is Looking Beyond Cameras
GoPro is also distinguishing itself from the competition by focusing on innovation. The company isn’t just churning out cameras, but rather developing new digital image technology that can be used with consumer-grade devices.
Case in point: GoPro’s most recent patent is for image sensor data compression and dsp decompression, another step in the company’s quest to raise the bar for crisp, clear images. GPRO’s patented technology could be a hurdle for competitors.
GPRO’s Numbers Indicate Growth
GoPro’s Q4 2014 revenue was $634 million, up 75% over Q4 2013. Plus, the company’s full-year revenue of $1.4 billion was up 41% over 2013.
In addition, GPRO stock trades at 45.58 times trailing earnings and 24.99 times next year’s estimates, so investors can expect the company to grow.
JPM Securities has given the stock a price target of $105, and the mean price target is $64.09, representing an upside of about 42% from its current price.
GPRO’s Cachet and Brand Recognition Are Strong
GPRO recently announced a deal with Vislink to enable broadcast capability on GoPro devices and put the technology on display at the NHL All Star Weekend. This was the company’s first major sports deal. The cameras’ capabilities were also showcased through a live broadcast of the Winter X games on ESPN.
However, it’s not just the sporting community that’s caught on to the wonders of GoPro cameras–the devices are also taking Hollywood by storm. Today, more than 70 different television shows, including Deadliest Catch, use GoPro cameras.
GoPro isn’t just for professionals, either. The company has expanded the lifestyle action camera market to include the family and casual users. Everyday consumers have seen what GoPro cameras can do and like what they see.
GoPro is a name that’s becoming synonymous with extreme sports, so it’s no surprise that the company is positioning itself to be the authoritative chronicler of these sports (a smart move in today’s synergistic climate).
Though there are companies undercutting GoPro, their cheaper products don’t appear to match the quality of GoPro devices. Without that, serious athletes and professional videographers will likely continue to choose GoPro.
As of this writing, Will Emerson did not hold a position in any of the aforementioned securities.