Here’s Why Fitbit Inc (FIT) Shares Just Took a Deep Plunge


Do Fitbit Inc (NYSE:FIT) shareholders have a reason to be concerned? Pacific Crest analyst Brad Erickson sure does think so. The analyst just downgraded FIT to Underperform (from Sector Weight), sending shares down nearly 11%.

Erickson explained, “Checks indicate Charge 2, Fitbit’s flagship holiday product, is off to a slow start. Inventory is accumulating in the channel and sell-through is below initial Blaze/ Alta levels. We are raising our Q3 estimates on strong channel fill but lowering Q4 and 2017 on weaker demand, and downgrading to Underweight. We think FIT’s utility problem persists, making growth more challenging and tilting risk/ reward more unfavorable.”

The analyst continued, “We spoke with 15 big box retailers in the United States now that Charge 2 has hit full distribution. Our checks are already finding meaningful inventory accumulation in the channel; more than two weeks of inventory is on hand. While sell-through should ramp meaningfully as the holiday nears, Charge 2 run rates are below where Blaze and Alta began earlier this year, which is a disappointing start, in our view. Based on current run rates and inventory, we estimate the company likely shipped in 600,000-800,000 Charge 2 units in Q3.”

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brad Erickson has a yearly average return of -5.7% and a 50% success rate. Erickson has a -53.1% average return when recommending FIT, and is ranked #3641 out of 4181 analysts.

Out of the 17 analysts polled by TipRanks (in the past 3 months), 11 rate Fitbit stock a Buy, 5 rate the stock a Hold and 1 recommends a Sell. With a return potential of nearly 42%, the stock’s consensus target price stands at $21.11.

 

  • Rene Jacobsen

    I liked my first Fitbit, I liked my second Fitbit. But here is the problem and why I won’t buy the new ones.
    After using my first Fitbit for some months the glue started failing and it started falling apart, I then wrote to Fitbits Support and they kindly sent me a new one. This was great until it as well started falling apart.
    My girlfriend went through the exact same process will her Fitbit’s and as far as I can tell from a bit of Google’ing, many other people as well.
    The next issue I got was the charging port. At least on my Fitbit Charge it is a poorly constructed proprietary charging solution with a very limited lifespan, when I need to charge my home glued device it takes at least 5 tries to get it to keep charging while lying on my desk. I am sorry to say that I will most likely not be buying their new devices.