Why GoPro Stock Is Regaining Ground

Recent overselling and analyst optimism mean go time for GoPro

By Alyssa Oursler, InvestorPlace Contributor

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It’s only Tuesday, but it’s been a pretty good week for stocks so far. An apparent light at the end of the tunnel for the Greek crisis turned “skepticism into optimism” and had investors cheering equities upward across the board.

gpro stock gopro stock gopro hero4That phrase is also the reason investors were cheering GoPro (GPRO) higher on Tuesday.

As MarketWatch reported, Barclays’ Joseph Wolf used that phrase as the reason for his upgrade of GoPro stock. More specifically, he pointed to new products (including drones), acquisitions, external hires and brand strength as the reason for the new “overweight” rating and $65 price target for the stock.

That target represents a whopping 30% increase over the previous target of $50 and 18% higher than the stock’s price, even after today’s jump.

The double dose of optimism helped GoPro record some more extreme gains. On Tuesday alone, shares surged more than 5%, hitting $55 and breaking through their 50-day moving average.

GoPro Stock Continues Its Recovery

Such an outsized jump for GoPro stock is welcome considering shares had an outsized fall over the last month or so. As of the start of the week, GoPro shares had slid 12% since their June highs. The broader market’s weakness during that time shook out a good deal of folks and kicked GoPro’s relative strength as low as 18 — a sign the reaction was a bit overdone.

InvestorPlace actually pointed out this reversal yesterday, just before the jump, diving into some of the new products and general growth prospects for the company. John Kilhelfner wrote: “Now that the enthusiasm for GoPro stock has tempered, and the true reality behind the GPRO business has begun to crystallize, it’s time to start buying GoPro stock again.”

Maybe he had a crystal ball — investors are certainly buying now. But when it comes to continuing the upwards momentum, things may still be a bit rocky in the short-term.

For starters, while the upgrade is indeed a bullish call, it’s hardly as eye-popping as some of the aforementioned math makes it seem. That’s because the new $65 price target is actual below the analyst community’s median estimate of $66.50 and the mean consensus of almost $70. So Barclays is in a sense playing catch-up, while investors were to an extent merely reacting to a prior overreaction.

GoPro stock will also likely face some resistance around its 200-day moving average just above $57. While some sellers were already shaken out by the recent weakness, some are probably hoping to regain their losses then head for the exits.

Once GoPro breaks through that level, though, it could be set to ride the nearly 30%-per-year earnings growth to even more stock gains.

Alyssa Oursler is based in San Francisco and writes about technology, investing, gender and entrepreneurship. Her work has appeared on Business Insider, MSN Money and more. You can follow her on Twitter here or check out her personal site here. As of this writing, she did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/07/gopro-stock/.

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