Fitbit (FIT) released their third-quarter earnings, and the numbers trumped all of Wall Street’s expectations. Specifically, revenue reached $394 million, which beats Street’s predictions of $381 million. Looking ahead, Fitbit sees FY2018 revenue of $1.5 billion, versus consensus estimates of $1.48 billion.
The company is recovering from not-so-popular results after releasing the smartwatch Ionic. The watch didn’t reach a wide enough audience, at least according to CEO James Park. FIT later began to make “health” a larger focus of the product’s functionality, which seems to be a hit. Smartwatches are gaining more and more consumer traction. So what’s next?
Oppenheimer’s top analyst Andrew Uerkwitz weighs in on the stock, reiterating an Outperform rating with a price target of $8.00, implying an upside of about 36%.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Uerkwitz has a yearly average return of 21.5% and a 59% success rate. Uerkwitz has a -22.9% average loss when recommending FIT, and is ranked #97 out of 4,887 analysts.
“What we thought was a runner’s high in 2016/2017 turned out to be the wall. The fitness trackers euphoria came to an abrupt end. Since, Fitbit refueled with a dual strategy. First the company focused on other hardware, namely smartwatches, and second, focused on building a service business related to digital health. This second leg is what we have been and continue to be most excited about. It’s been a slog. However, with trackers finding a base and smartwatches gaining traction (internally now 49% of revs and 2nd in global market share), the hardware business seems to have found its footing and we could see growth in 2019. More important, as digital health becomes material, investors should expect more detail on monetization and user strategy,” Uerkwitz said.
“We continue to see value in the company’s broad platform: social, hardware, and wellness. Being agnostic to OS and with many partnerships, ongoing studies, and large user base (i.e., most data), Fitbit is best positioned to benefit from a growing digital wellness/health market. 2019 could be the turning point,” Uerkwitz concluded.
When it comes to tracking what the Street has to say about the stock, you’re in luck. TipRanks reviewed 10 analysts who have their fingers on the pulse of Fitbit stock in the last three months. Four rate the stock a Sell, three a Hold and three a Sell. The consensus price target is $6.53, showing an upside of just about 13%. (See FIT’s price targets and analyst ratings on TipRanks)