Wall Street has initiated coverage on Fitbit, and everyone we’ve seen is bullish.
Shares of the maker of fitness trackers rallied 4% in early trading on Monday, and are up 44% since the IPO June 18.
Deutsche Bank thinks the stock is “fit for further upside,” and analysts have placed a $US50 price target on the stock, which has climbed to as high as $US44.38 per share since it started trading.
“Clearly some of the ‘easy money’ has been made in the doubling since the IPO, and the FIT story is not without significant risks including the customary lock-up expiration pull-back we expect in the next few months, but we view the risk/reward as favourable,” the firm wrote in its note.
Deutsche Bank thinks Fitbit has a “massive” market obtainable, particularly in developed markets where more adults own smartphones.
Morgan Stanley says that although Apple is a much bigger company with its own device, their estimate of 17 million Fitbit sales this year is still intact. “What’s more, Apple Watch likely won’t convert full purchase intentions indicated in the survey until Watch 2.0 launches and supply/distribution improves,” they wrote.
They have a $US42 price target with an “Equal-weight” rating.
But like iPads, the growth of Fitbits could stall and they could ultimately be used only by a smaller, niche audience. In a note late June, RBC Capital Markets analysts presented their research showing that there’s greater demand for Fitbit devices than Apple Watches.
Barclays also has an “Equal weight” rating on the stock, with a price target of $US45.
“We believe that Fitbit’s market share dominance is difficult to replicate and likely not changing in the near term,” the firm wrote, adding: “In particular, we note that despite all the hype and media attention regarding the Apple Watch, Fitbit has quietly outperformed Apple in terms of Google search activity in the past few months …”
Piper Jaffray is out with a price target of $US52 and an “Overweight” rating on the stock.
Piper wrote that, “while there is a rising tide of competition, we believe the two most attractive characteristics of the company are: 1) the strength of the brand; and 2) the accessibility of the brand across multiple ages, incomes and geographies. With superior growth metrics to-date and the significant potential for global growth and new product introduction, we believe FIT has the characteristics to trade similar to high-growth, consumer-facing brands such as Under Armour, GoPro and LinkedIn.”
With the most bullish 12-month price target of $US57, and a “Buy” rating, Stifel says Fitbit is set to gain from an explosion in consumer spending on health and fitness.
“The more holistic $US200 billion global health and fitness services market has strong secular tailwinds and we see the use of technology for fitness and wellness applications as a megatrend within this category.”