GoPro Inc (NASDAQ:GPRO)’s Hero camer is hard to find in stores this holiday season and according to Michael Pachter of Wedbush Securities in a CNBC discussion, this should make the technology company happy.
Pachter said that GoPro Inc (NASDAQ:GPRO) may be expensive, trading at 40 or 50 times next year’s consensus earnings estimates, but people are looking at the stock again. Furthermore, he said that he thinks earnings growth will justify the premium for the company stock.
According to Pachter, GoPro Inc (NASDAQ:GPRO) may have actually underestimated that demand for its camera this holiday season when they released their guidance last October. The lowest-tier and mid-tier cameras of the company are selling very well in stores, he said.
“I checked this morning, the Hero is still not available anywhere. Best Buy says its available for pickup and the nearest store to go is 400 miles away. Best Buy literally has a handful of them. Target has none. Wal-Mart has none,” he said.
The low-priced camera is selling out while the medium-priced camera is selling very well, he said. He noted that the expensive GoPro Inc (NASDAQ:GPRO) camera is still on stock but with great low-tier camera sales comes accessory attach rates.
“I think these guys are just going to crush it in December and I think have a very good March quarter as well,” Pachter said.
For those who say that GoPro Inc (NASDAQ:GPRO) may see its accessories business hit by off-brand accessories, Pachter said that people see GoPro accessories as of a better build quality. Once accessories made by other companies fail, consumers will see the value in buying original accessories, he said.
He said that the fact that GoPro accessories can be discounted by online retailers point to the fact that margins for these products are generous.