Fitbit Inc (FIT) Shares Could Re-Rate Higher on Back of Digital Health Transformation: Oppenheimer

Focusing on DIY Fitness Crowd Is a Good Start, Says Analyst


Fitbit Inc (NYSE:FIT) is making bold moves to broaden its scope from just a fitness tracker provider to a comprehensive fitness-oriented platform. As the company introduces a host of new wireless devices and a premium fitness coaching service, management is preparing to launch the company into “the next stage of growth within wearables and connected health.”

Sensing an opportunity of growth and compelling evolution for Fitbit, analyst Andrew Uerkwitz of Oppenheimer maintains an Outperform rating on FIT with a price target of $8.00 representing a 34% rise over current trading levels. (To watch Uerkwitz’s track record, click here)

While opining that the welcomed changes at FIT have come “probably a year or two late,” the analyst is applauding the company, underscoring that “with the announcement of a smart watch, headphones, gen2 scale, and a guidance/coaching app, we see the company doubling down on fitness and moving well beyond basic activity trackers […] If these launches are successful, we believe the shares could re-rate much higher […] as a connected health company being more valuable than a fitness tracker hardware company.”

Highlighting the number of products and services the company is releasing, the analyst sees a solid change in direction. The new fitness watch will come with a “four-day battery life, GPS, and an app store. More importantly it will have an SpO2 sensor that will allow for deeper analysis,” notes Uerkwitz. The new fitness-focused headphones, says the analyst,“build the eco-system (watch, software, and audio) […] 64% of fitness tracker owners are interested […] it makes sense to enter this space.” The analyst also expects the new wi-fi smart scale to provide greater value to users, because “the updated scale improves accuracy and eases bottlenecks in setup and device connection […] the data will be used across the Fitbit portfolio of services.” Lastly, the new premium subscription Fitbit Coach service is significant as it analyzes “data and activity levels to give users customized workouts, programs, and content based on user-set goals.”

Looking ahead, Uerkwitz hopes that by “focusing on the DIY fitness crowd is a good start and, if successful, should drive a re-rating in the stock’s valuation.”

TipRanks analytics exhibit FIT as a Hold. Out of 7 analysts polled by TipRanks in the last 3 months, 2 are bullish, 1 bearish, while 4 are sidelined on Fitbit stock. With an upside potential of 4%, the stock’s consensus target price stands at $6.20.