Goldman Sachs Maintains Insta360 Buy Rating, Target Price 311 Yuan

Overview

Goldman Sachs published a research report maintaining its Buy rating on Insta360 (688775.SS) and keeping the 12-month target price at RMB 311. The report notes that although short-term rises in memory chip costs put pressure on gross margins for brands, leading to downward revisions to 2026 earnings forecasts by institutions, the company is expected to offset cost impacts and achieve growth in the long term through continuous product iteration, R&D investment, and supply chain diversification strategies. The report emphasizes that the company's leading position in sports and 360-degree cameras, rich accessory ecosystem, and application of AI in daily operations are core supports for its long-term competitiveness.

Core views

Short-term performance pressure and earnings forecast adjustment: The report lowered Insta360's 2026 net profit forecast by 21%, mainly due to the weighted impact of rising memory costs on gross margins for brand manufacturers, while consumer electronics terminal demand was slightly suppressed. Financial results from Q4 2025 and Q1 2026 reflected this trend. However, the report believes that as memory costs peak and with continued investment from the company in new products (such as gimbal cameras), the turning point may arrive soon, supporting growth in the second half of 2026. Long-term earnings forecasts from 2027 to 2030 remain largely unchanged. Long-term growth drivers and competitive advantages: The report maintains a positive long-term outlook on Insta360's growth prospects, mainly based on five pillars: first, high-end brand image; second, powerful R&D capabilities empowering user experience, with R&D engineer headcount increasing 59% YoY in 2025 to 2,180 people, and R&D expenses growing 49% and 101% YoY respectively in Q4 2025 and Q1 2026; third, leading position in the sports and 360-degree camera markets, continuously expanding new product lines; fourth, rich accessory offerings expand application scenarios and attract potential customers; fifth, supply chain diversification to mitigate the impact of memory supply shortages. Additionally, the company's operational efficiency is also improving, with unit marketing expenses down 10% YoY in Q1 2026, actively deploying AI technology. Valuation logic: Goldman Sachs continues to use the Discounted P/E method to determine the target price, capturing the company's long-term growth potential. Institutions set the target P/E ratio for 2030 at 20x, derived based on consumer electronics peers' PEG&M (correlation between 2026 P/E ratio and 2027 net profit growth rate and operating margin). By applying the 20x P/E to the expected EPS for 2030 and discounting back to 2027 using a 13.5% Cost of Equity (COE), the 12-month target price is calculated at 311 RMB.

Analysis framework

The report adopted a typical long-term growth stock valuation framework, combining fundamental analysis with relative valuation methods. First, by analyzing recent financial statements (4Q25/1Q26), short-term disturbance factors (memory costs) were identified, and recent earnings forecasts were pragmatically adjusted downward, reflecting sensitivity to cyclical fluctuations. Second, from a long-term perspective, the report focused on qualitative analysis of the company's competitive moat (brand, R&D, market share) and operational efficiency improvements (declining marketing expense ratio, AI application), using them as the basis for long-term earnings recovery and growth. Finally, at the valuation level, without simply using the current P/E ratio, it adopted the 'Forward P/E Discounting Method', i.e., selecting a long-term stable year (2030) as the valuation anchor, referencing industry comparable companies' growth and margin relationship to determine a reasonable multiple, then discounting back to the present, a method more suitable for high-growth technology companies with short-term profit volatility.

Methodology notes

• Valuation MethodPE/PEG valuation

  Forward P/E Discounting Method

  The report does not directly use the current P/E ratio, but forecasts a reasonable P/E ratio for the future (2030), combines growth and margin indicators (PEG&M) to determine the multiple, and finally discounts back to the current year. This method can smooth out short-term fluctuations and more accurately reflect the long-term intrinsic value of high-growth companies.

• Company Fundamentals and Financial FrameworkOperating/Financial Leverage Analysis

  Operational Efficiency & Unit Economics Model

  The report focuses on changes in 'unit marketing expenses' and expansion of R&D personnel. By analyzing the decline in unit costs and conversion of R&D investment, judge the release potential of the company's operating leverage and long-term competitiveness.

• Industry/Industrial Analysis FrameworkUpstream/Midstream/Downstream Industry Chain Transmission

  Upstream Raw Material Cost Transmission

  The report analyzed how upstream memory chip cost increases were transmitted to downstream brand manufacturers, causing short-term pressure on gross margins, and pointed out that supply chain diversification is a key strategy to alleviate this transmission pressure.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Insta360 (688775.SS)

  Beneficiary subject, the report directly covers and gives a Buy rating

  Strengths

  Global leader in sports and 360-degree camera markets, strong R&D capability, brand premiumization, rich accessory ecosystem

  Weaknesses

  Short-term gross margins affected by rising memory costs, consumer electronics demand volatility

  Risks

  Intensified market competition, shipment growth below expectations, accessory attachment rates below expectations

Key data

• 12-Month Target PriceRmb311.00Maintained, implies upside of 58.4%
• 2026E Net Profit Forecast Adjustment-21%Adjusted down due to rising memory costs and constrained demand
• 2025 R&D Engineers Count2,180 peopleYoY increase 59%
• 2026Q1 Unit Marketing Expenses-10%YoY decrease, showing operational efficiency improvement
• 2030E Target P/E Ratio20xDerived based on consumer electronics peers PEG&M
• Cost of Equity (COE)13.5%Used for discounting calculation, maintained unchanged

Impact & implications

The report believes that despite short-term cost pressures, Insta360's long-term growth logic remains unchanged through product premiumization and supply chain optimization. For investors, the current stock price adjustment may offer an opportunity for long-term positioning, as the market may have overreacted to the short-term memory cost shock, ignoring the company's monopolistic position in sports cameras and 360-degree cameras and the high growth potential of the accessory business. Institutions maintain the Buy rating, indicating confidence in the company's ability to cross cycles.

Risks

• Market competition is fiercer than expected
• Shipment growth of sports and 360-degree cameras slower than expected
• Accessory attachment rates lower than expected

What to watch

• Trend and inflection point of memory costs
• Market performance of new products (e.g., gimbal cameras)
• Performance recovery situation in the second half of 2026