Piper Jaffray Slashes Price Target For Fitbit Inc (FIT); Here’s Why

In a research report issued a short while ago, Piper Jaffray analyst Erinn Murphy reiterated an Overweight rating on shares of Fitbit Inc (NYSE:FIT), while reducing the price target to $24 (from $60), which implies an upside of 52% from current levels. While the analyst still believes that shares look attractive on a fundamental basis, she adjusts the price target given the multiple compression in the space.

Murphy commented, “While FIT has clearly been a very challenged stock YTD, we remain OW the stock into the Q4 print. As we are now past the share lockup period, investors should begin looking at fundamentals again. While we are adjusting our multiple to reflect a reasonable rate given the compression we have seen in valuations across the space, we are still positively biased. We are expecting a “beat” to Q4 sales & EPS and see Q1 guidance coming in ahead of expectations. We are comfortable with our FY16 EPS estimate of $1.20 (vs. the Street $1.14). We view FY16 favorably given already announced new product launches (with more to come), the opportunity on the corporate wellness side, and an attractive multiple entry point into shares (~13x vs. a two-year fwd blended EPS growth in the low-60% range).”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Erinn Murphy has a yearly average return of -13.0% and a 32.8% success rate. Murphy has a -48.5% average return when recommending FIT, and is ranked #3590 out of 3640 analysts.

Out of the 19 analysts polled by TipRanks, 15 rate Fitbit Inc. stock a Buy, while 4 rate the stock a Hold. With a return potential of 150.6%, the stock’s consensus target price stands at $39.50.

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