Why Bob Peck Is Still Buying Fitbit

• Fitbit Inc FIT shares are down 19 percent in the last three months, after hitting a high of $51.64 on August 5.
• SunTrust Robinson Humphrey’s Robert S. Peck initiated coverage of the company with a Buy rating.
• Traction in corporate wellness has accelerated, spelling opportunities in device sales and beyond, Peck mentioned.

Fitbit’s “immediately addressable opportunity” is the market for wearable devices, which is worth more than $30 billion. Analyst Robert Peck added that corporate wellness is “a critical channel for device sales.”

Fitbit’s ramp seems to have accelerated since the IPO, which is when the company started devoting additional resources to developing the corporate wellness channel. Fitbit currently has more than 50 companies in the Fortune 500, as compared to 30 at the time of its IPO.

“A back-of-the-envelope analysis suggests corporate wellness alone could generate up to ~$1B of revenues annually for Fitbit,” Peck wrote.

The analyst believes that devices are only “one part of the Fitbit story.” He explained, “As the company continues to expand the platform and as consumers increasingly view connected health and fitness products and services as an alternative, or complement, to other health and wellness activities, we think there is a much larger opportunity.”

An increasing number of companies is sponsoring employee wellness programs. Fitbit could “expand the relationships to include the health insurers in the equation,” Peck added.