How Fitbit Doubles From Here

• Fitbit Inc FIT shares have appreciated 29.72 percent over the past six months, from a low of $29.68 on June 18.
• Leerink’s Steven Wardell has reiterated an Outperform rating on the company, while raising the price target from $79 to $81.
• The company posted higher than expected top and bottom lines, as well as gross margins, putting to rest investor concerns regarding Fitbit’s gross margins.

Analyst Steven Wardell mentioned that the company reported its 3Q revenue 14 percent above the consensus forecast, with the EPS beating the consensus by 143 percent. Shipments and GAAP gross margin were also significantly ahead of the consensus.

“We believe that these results put to bed the "rapid commoditization of activity trackers" bear thesis about Fitbit and its gross margin,” Wardell stated.

The company has raised its 2015 revenue guidance to $1.8 billion, 6 percent above the consensus expectations.

Fitbit has also announced a follow-on offering of 24 million shares, which Wardell believes would have only a low dilutive impact on the stock. In addition, the company has released the lock-up on about 2 million employee shares earlier than anticipated, since they would be effective as of November 4, 2015.

“The company is pressing its formidable advantage and seems to be taking share in a fast-growing market,” the Leerink report added.