These Fitbit Numbers Make The Stock A Screaming Buy

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  • Shares of Fitbit Inc FIT have risen 11.02 percent over the past month, from a low of $31.84 on September 14.
  • Pacific Crest’s Brad Erickson has maintained an Overweight rating on the company, with a price target of $47.
  • Checks indicate that the demand for Fitbit devices continues to be “very strong” heading into the holiday season, although inventory appears “curiously low.”

Analyst Brad Erickson believes that “investors remain overly concerned with competition, with corporate wellness remaining the most underappreciated part of the story.”

Related Link: GoPro Vs. Fitbit: What's The Better Investing Case?

Checks at U.S.-based big box channels suggest that the sell through of Fitbit devices has been better than expected, with Charge HR being especially strong. The checks also show that demand has increased month-on-month, while inventory days have declined almost 23 percent.

According to the Pacific Crest report, “While a new product for the holiday would appear unlikely given it is mid-October, curiously low inventory this close to the holiday leaves room, in our view, for either meaningful incremental replenishment or channel fill opportunities.”

Erickson also mentioned that investor feedback suggests that the company’s corporate wellness opportunity is being underappreciated and misunderstood. Bearish investors usually point to the possibility of pricing headwinds, Fitbit’s inability of engage employees and inadequate data to support ROI.

“For our part, the power of brand is quickly dismissed, pricing relative to average wellness spending is not well understood and 151 million insured lives by US companies alone is being heavily discounted as an incremental opportunity,” Erickson stated.

Erickson believes that the corporate wellness segment represents “hundreds of millions of units TAM that is hardly penetrated, from which FIT can drive revenue and EPS upside today.”

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Posted In: Analyst ColorReiterationAnalyst RatingsTechBrad EricksonPacific Crest SecuritiesVetr
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