We See More Upside than Downside on Fitbit Inc (FIT) Shares, Says Dougherty & Co

Dougherty & Co analyst Charlie Anderson is taking a cautiously optimistic approach to Fitbit Inc (NYSE:FIT) after last month’s rocky fourth-quarter earnings preannouncement sent shares tumbling and investors running for the hills. However, though the analyst remains sidelined, he sees room for the leading fitness wearables maker to stage a comeback.

Ahead of the print, the analyst reiterates a Neutral rating on shares of FIT without listing a price target.

Ultimately, “With the stock trading at floor valuations (0.5x EV/S on the mid-point of FY17 revenue guidance), it looks like there is more upside than downside at these levels. It’s not lost on us that GPRO shares rallied last year after it similarly announced below-expectation results. Why did that happen? An expectation that products would improve. Thus, a bet on FIT at these levels is a sentiment trade based on faith that Fitbit will improve its products and convince people who have never bought a Fitbit to buy one. A bet against FIT here is a bet that the activity tracker market is fully saturated and will contract faster than Fitbit can counter-act with new products. We see the risks distributed evenly and are thus staying Neutral rated,” Anderson surmises.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Charlie Anderson is ranked #967 out of 4,490 analysts. Anderson has a 58% success rate and realizes 11.7% in his annual returns. When recommending FIT, Anderson yields 123.0% in average profits on the stock.

TipRanks analytics indicate FIT as a Hold. Out of 11 analysts polled by TipRanks in the last 3 months, 1 is bullish on Fitbit stock, 8 remain sidelined, and 2 are bearish on the stock. With a return potential of 6%, the stock’s consensus target price stands at $6.33.

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