Fitbit's Inventory Into Christmas Signals Risk To Q1 Street Estimates

Pacific Crest said the Street’s first-quarter estimates for Fitbit Inc FIT may be at risk, as checks show the company’ days of inventory have trekked higher exiting the quarter.

“While a Q1 miss could mean more downside, we think buy-side expectations are below sell-side and thus remain Sector Weight on the name,” analyst Brad Erickson wrote in a note.

The brokerage’s U.S. channel checks in mid-December indicate that Fitbit's days of inventory remain above targeted levels at nearly 18 days.

“Blaze and Alta sales volumes held up a bit better than we would have thought, but we believe Charge 2 inventory is particularly bloated in certain parts of the country and Flex 2 demand has proven disappointing throughout,” Erickson highlighted.

As a result, the analyst now expects units to decline next year by 15 percent versus prior estimate of down 7 percent. For 2017, Erickson cut his EPS/revenue forecast to $0.01/$1.999 billion from $0.25/$2.193 billion. The consensus calls for EPS of $0.65 on revenue of $2.44 billion.

Focus For The Future

Commenting on the acquisitions of Pebble and Coin, Erickson said there are limited opportunities in possible software application for a fitness tracker such as payments. The analyst believes the company should focus on healthcare through new sensor development or insurance/provider partnerships.

“However, we need more visibility of that before getting more constructive,” Erickson added.

At last check, shares of Fitbit were down 0.6 percent at $7.39.

Image Credit: By Unknown - Here, Public Domain, Wikimedia Commons
Posted In: Analyst ColorNewsPrice TargetReiterationAnalyst RatingsMoversTechBrad EricksonCoinPacific CrestPebble
We simplify the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...