You could say this stock is not quite fitting with the Street’s expectations. It’s doing better. Fitbit (FIT) stock has eyes on it after coming out with a better-than-anticipated third-quarter earnings report thanks to strong growth in its smartwatches and trackers.
This is somewhat of a win for the stock after sales plummeted following the release of the Iconic smartwatch, which seemed to be a fail. Nevertheless, the company is back and Roth’s analyst Scott Searle maintains a Buy rating with a price target of $8, which shows a 31% upside. (To watch Searle’s track record, click here)
Fitbit reported Q3 sales of $393 million, beating their own guidance of $370-390 million and surpassing — Searle’s expectations of $377.5 million. The Fitbit excelled with 49% more sales for Smartwatches and 48% more trackers. 3.5 million devices were shipped out during this quarter. Searle highlights that Fitbit became the number two market share position due to increases in their sales. The numbers have given the analyst hope for the winter quarter.
“Regardless of the peer group (wearables/devices, IoT, digital health or watches), FIT remains discounted by 50-70%. This is despite the premium brand name, leadership in wearables (a growth market with less than 20% global penetration) and a rapidly developing digital therapeutics opportunity. With solid 3Q18 results and a reaffirmed 4Q18 outlook, street numbers for 2019 and sentiment will need to improve, in our opinion. We are modestly adjusting our 4Q18 and 2019 estimates, but continue to have no contribution for digital therapeutics.” Searle said.
The analyst believes the business of healthcare in general has been underappreciated on Wall Street and that Fitbit Care, its enterprise wellness platform, will take basic tracking to care management that could turn into tens of millions of dollars in recurring sales.
For Searle, it seems like the second hand is coming back around for Fitbit. But that’s not necessarily what the rest of Wall Street thinks as TipRanks analytics reveal FIT as a Hold. Out of 10 analysts polled in the last 3 months, four are bullish, three are sidelined and three are bearish. Altogether, the consensus price target is $6.53, showing about 6% upside. (See FIT’s price targets and analyst ratings on TipRanks)