Image source: GoPro.

It's showtime for GoPro (NASDAQ:GPRO). One of last year's worst performers is rallying these days, and there will be a lot riding on the other end of the weekend. GoPro is hosting a media event on Monday -- 10:30 a.m. on the West Coast -- where it will unveil its first entry into the competitive drone market. At least one Wall Street pro seems to want to get in ahead of the news: Bank of America/Merrill Lynch initiated coverage of GoPro stock on Friday morning, slapping a $19 price target and a buy rating on the leading maker of wearable cameras. 

The thinking here is that we're at the start of a new product cycle. Between the Karma drone and the upcoming debut of the Hero 5 camera, GoPro will have a much better slate of potential game changers heading into the holiday shopping season than it did last year. 

After three quarters of sharp year-over-year declines on the top line -- brutal 31%, 50%, and 47% slides, respectively -- GoPro finally has a one-two punch in the pipeline to reverse the trend. Analysts see a return to heady sales growth by the holiday quarter, targeting a 54% surge in revenue in the fourth quarter after a 21% decline for the current quarter. 

Moving pictures

GoPro's stock was a disaster for growth investors last year, shedding 71% of its value. It got off to a horrendous start in 2016, shedding more than half of its value before bottoming out in May. It has rebounded sharply since then, despite the initial delay in the Karma and Hero 5 rollouts. 

There's still pessimism in the air. The 30.8 million shares of GoPro sold short represents the highest short interest in the stock since January. There's no shortage of analysis claiming that it may be too late for GoPro to matter in the drone market with concerns that it may have peaked last year. 

However, discounting the drone opportunity and the high short interest for GoPro are two of the many reasons why Merrill Lynch's Jason Mitchell is bullish on the stock in this morning's analyst note. He waxes upbeat on the Hero 5, the reduced channel inventory that has been whittled down in recent quarters, and GoPro's focus on software and cloud connectivity.

GoPro stock may be a shell of what it was two years ago when the Hero 4 was the hot holiday gift of the 2014 shopping season, but the company is smarter now. It no longer has all of its eggs in the one basket. Yes, it's also competing against smartphones that have improved their cameras and in some cases made their products water- and dust-resistant. It is harder to stand out with a stand-alone gadget these days. However, GoPro is ready for another shot at relevance -- and that chance comes on Monday.  

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.