Fitness wearable device company Fitbit Inc (NYSE:FIT) made its debut on Wall Street when the company released its IPO this past July for $20 per share. While the company’s IPO was wildly successful, some investors can’t help but compare the wearable device to Apple Inc’s (NASDAQ:AAPL) Apple Watch.
However, Wall Street analysts have been trying to assure FitBit investors that the Apple Watch is not a threat as the company is growing at an extremely fast rate. Additionally, Fitbit prices range from $60 to $250, compared to the Apple Watch that starts at $350 and climbs to $10,000.
Pacific Crest analyst Brad Erickson weighed in on FitBit on September 15, initiating an Overweight rating on the stock with a $47 price target. The analyst believes investors should not be concerned about the Apple Watch taking away market share from FitBit as “the business is growing ridiculously fast.” He noted, “Apple’s current presence in fitness watches doesn’t represent a risk to Fitbit, in our view, and in the absence of a product launch from Apple, we think Fitbit’s growth can exceed expectations, with competitive concerns likely proving overdone at current levels.”
Furthermore, the analyst forecasts “a 54% three-year revenue CAGR, but without margin expansion this year due to high marketing spending.” He concludes, “We think there’s likely upside to numbers and would note a lack of precision to our and consensus estimates given that Fitbit’s guidance assumes no new product introductions, which we believe are likely.”
On average, Erickson has a 55% success rate recommending stocks and a +3.8% average return per recommendation when measured over a one-year horizon and no benchmark.
R.W. Baird analyst William Power also weighed in on Fitbit on September 15 following a meeting with Fitbit management last week, reiterating an Outperform rating on the stock with a $54 price target. The analyst acknowledged the company’s focus on “more user engagement over time.” He noted, “the company believes that new features, like heart rate monitoring, should continue to improve engagement. As the base grows, improving engagement to help drive upgrades will become more important.”
Power currently has an overall success rate of 56% recommending stocks and a +9.5% average return per recommendation when measured over a one-year horizon and no benchmark.
Out of 15 analysts polled by TipRanks who have rated Fitbit within the past three months, 10 are bullish and 5 are neutral. The average 12-month price target on Fitbit is $53.69, marking a 62.5% potential upside from current levels.