Why GoPro Shot Up 22% in April

By Markets Fool.com

What: Shares of action camera manufacturer GoPro shot up 22.47% in April, according to S&P Capital IQ data, as investors reacted positively to the company's first-quarter earnings, bullish second-quarter guidance, and analyst upgrades.

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GPRO Chart

GPRO data by YCharts

So what: GoPro's growth story continues. On April 28, the company posted a year-over-year revenue increase of 54% by growing its top line to $363 million in Q1. On an adjusted EPS basis, the company reported $0.24. In both totals, the company performed better than expectations of $341 million and $0.18, respectively.

In a sign that the company is owning the action-capture market, the company reported research firm NPD's data that the top five products on a units sold basis in the combined digital camera and camcorder category are GoPro models.

Furthermore, the company guided to higher figures than analyst consensus. The company expects second-quarter revenue to be in the range of $380 million-$400 million, a midpoint nearly 17% higher than analysts' estimates of $333.7 million. On an earnings per share basis, the company expects second-quarter EPS in the range of $0.24-$0.26, 56% higher than the $0.16 analysts were predicting at the midpoint.

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Now what: GoPro's been a volatile stock, and this should continue. The company is a high-growth company and estimates about the company's future growth will vitally matter to investors. For example, after the company's fourth-quarter earnings report, the stock violently reversed after the company reported solid earnings but investors reacted poorly to first-quarter EPS guidance of $0.15-$0.17 per share and a departing executive. As we witnessed from the $0.24 the company reported, the company's estimate was conservative.

Following the most recent report, analysts at Raymond James upgraded the company from market perform (essentially neutral) to outperform with a note that "[we] expect EPS growth of 25% to persist through 2016." If GoPro continues to execute, it is entirely possible that Raymond James is underestimating GoPro's bottom-line growth.

The article Why GoPro Shot Up 22% in April originally appeared on Fool.com.

Jamal Carnette owns shares of Apple and GoPro. The Motley Fool recommends Apple and GoPro. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.