Battleground: Piper, JPMorgan split on GoPro after earnings

Two research firms have maintained their opposing outlooks on GoPro (GPRO) after the company reported stronger than expected results, with Piper Jaffray keeping a sell-equivalent rating on the shares and JPMorgan saying that the stock has room to run. RESULTS: GoPro reported a second quarter loss per share of (52c) last night, versus the consensus outlook for a (58c) per share loss. The company's revenue came in at $220.76M, versus the consensus outlook of $194M. The action camera maker said that its channel inventory declined 35% last quarter compared with Q1. BEARISH TAKE: Piper Jaffray analyst Erinn Murphy kept an Underweight rating on the shares, her firm's equivalent to a sell rating. Murphy noted that GoPro reiterated its previous fiscal 2016 revenue guidance despite its quarterly beat. Moreover, GoPro estimated that its gross margin would come in at 39%-41% during the rest of the year, versus Murphy's previous estimate of 41.1%, the analyst reported. Furthermore, GoPro's operating spending came in significantly above the analyst's outlook, she noted. Murphy slightly lowered her 2016 estimates for the company and kept a $6.50 price target on the shares. BULLISH TAKE: Calling GoPro's results "encouraging," JPMorgan analyst Paul Coster recommended buying the stock following the report. By offering fewer products, GoPro was able to raise its average selling price, Coster noted. The company's 2016 gross margin forecast is "encouraging," and it should be able to achieve its target of becoming profitable in Q4, Coster believes. The stock should rise as investors become more optimistic about GoPro's ability to generate "year-over-year annual growth and sustainable profitability," predicted Coster. He trimmed his price target on the stock to $16 from $17 but kept an Overweight rating on the shares. PRICE ACTION: In late morning trading, GoPro jumped nearly 10% to $12.70 per share. Ambarella (AMBA), a key supplier of imaging chips for GoPro, is up fractionally.