2016 Could Be Fitbit's First Major Upgrade Cycle; Piper Thinks Stock Will Double

• Shares of Fitbit Inc FIT are up 2 percent since June 19, having hit their 52-week high of $51.90 on August 4.
• Piper Jaffray’s Erinn E. Murphy maintained an Overweight rating on the company, with a price target of $60.
• New products and expansion into the corporate wellness vertical bode well for the company’s growth, Murphy believes.

Recent meetings with Fitbit CFO Bill Zerella and VP of IR Brad Samson revealed that the brand is strong and the international growth opportunity real. Management was positive on their product pipeline for 2016 with notable launches likely next year.

Management said that the company’s new products will have enough newness and innovation to result in an upgrade cycle besides fueling engagement. Fitbit also expects to post an improved gross margin profile for the new products. Analyst Erinn Murphy added, “We believe FIT's platform offers better engagement vs. their peers,” citing that it relates to corporate wellness.

Murphy believes that all the long-term vectors into healthcare support upside to the company’s shares. The company has been planning its Black Friday and other promotions well.

“We believe Fitbit has a unique opportunity as it expands into the corporate wellness vertical (<10% of sales),” the Piper Jaffray report noted, while adding that the company is working with 70 percent of Fortune 500 companies. The corporate wellness vertical is a higher margin business than the consumer side, Murphy pointed out.