GoPro's Karma Implications: Goldman Sachs Sees $277 Million In Drone Revenues Next Year

GoPro Inc (NASDAQ: GPRO) announced the launch of a subscription software offering, while introducing its first ever drone and refreshing its action camera portfolio with the new HERO5 Session and HERO5 Black.

Goldman Sachs’ Simona Jankowski maintained a Neutral rating on the company, while raising the price target from $12.50 to $14.00.

The HERO5 Products

“We see a favorable set-up into year-end for GoPro, with clean channel inventory exiting 2Q and support for seven languages enabling a stronger international presence,” Jankowski mentioned.

Related Link: Karma Drone Will Be Big This Holiday Season, But Is It A Turning Point For GoPro?

HERO5 Black is the company’s first update in two years, while the HERO5 Session is an upgrade of the 2015 Session.

“The $399 HERO5 Black is $50 less than the previous high-end HERO4 Black and $100 less than its initial launch price, while still adding GPS, waterproofing (eliminating the case), video stabilization, and voice control,” the analyst stated, while adding, “The new HERO5 Session fills in the mid-tier category at $299, with the original Session rounding out the good/better/best portfolio at $199.”

The New Drone

On the other hand, GoPro launched its first ever drone, Karma, which Jankowski believes has differentiating features and available at a competitive price point.

The analyst pointed out that the drone market, estimated at $2 billion, was still in the early stages of growth.

“GoPro should be able to leverage its strong consumer brand name, significant retailer shelf space and global distribution footprint to gain share. We estimate $31mn/277mn in drone revenues in FY16/17,” the analyst added.

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