GoPro Inc. slumped the most in six weeks after Morgan Stanley cut its rating and price target on the stock, based on slower consumer pickup of drones and a later rollout of its next-generation action camera.
Morgan Stanley analyst James Faucette reduced his rating to underweight and set a price target of $12, down from $23. GoPro plunged 9.6 percent to $17.31 at the close in New York, its biggest drop since Oct. 29. The stock is down 73 percent this year.
“Likelihood that high inventory persists into 2016, slower consumer drone opportunity, and later assumed HERO 5 compels us to cut estimates,” Faucette wrote in a note to investors.
Sentiment has been volatile for the action-camera maker. Last week GoPro posted its biggest gain in more than seven months after brokerage FBR & Co. said it could be on Apple Inc.’s list of potential acquisition targets. Investor interest had also been stoked as GoPro named its new drone, suggesting it was on track for release early next year.
Faucette said checks at big box retailers had been “a bit disappointing” for drones this holiday season and that “improvements in usage and easing editing will be important.”
Morgan Stanley is the second IPO underwriter to downgrade the stock. Citigroup analyst Jeremy David cut GoPro to neutral from buy on Dec. 11.