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Fitbit Inc (NYSE: FIT) reported its 2Q results ahead of expectation and kept its full-year guidance unchanged, implying “solid operating leverage” in 4Q16, SunTrust Robinson Humphrey’s Robert S. Peck said in a report. He maintained a Buy rating on the company, with a price target of $17.
Fitbit reported strong 2Q results, with virtually all matrices ahead of expectations. Unit sales of 5.7M came with ASPs of $99. The company recorded 47 percent y/y revenue growth, despite a revenue hit in APAC on account of a key retailer closing 370 stores in Australia and channel draw down.
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Fitbit did report one miss, with GM being impacted by a onetime warranty reserve charge for legacy products, analyst Robert Peck mentioned. Excluding this, margins would have been ~50.5 percent, ahead of consensus. At $115M, Sales & Marketing was better than feared and adj EBITDA of $48M beat the Street’s $44M.
Laying The Base For A Strong 4Q
Through 1H16, Fitbit was in “investment mode,” spending aggressively on R&D and marketing. Peck added that 3Q is seasonally slow and would likely be a transition quarter. Despite this, Fitbit maintained its full-year guidance, which implies significant top-line acceleration in 4Q, driven by new products and substantial operating leverage.
“While APAC outlook remains uncertain going into 3Q, we note Fitbit has a history of guiding conservatively, and actual results could be better,” the analyst wrote. He added that while Fitbit’s shares were trading at a discount to peers, the strong results could abate concerns related to fitness trackers being merely a fad.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.