Market Overview

Barclays Sees Buying Opportunity In Fitbit Selloff

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  • Fitbit Inc (NYSE: FIT) shares have plunged 28 percent in the last one month.
  • Barclays’ Matthew McClintock maintained an Overweight rating for the company, with a price target of $49.
  • The pressure on Fitbit’s shares following the launch of Blaze represents an attractive buying opportunity, McClintock stated.

The Fitbit Blaze has been announced, and is expected to become available globally from March 2016. Analyst Matthew McClintock commented that the Blaze expands Fitbit's product line, allowing it to increase its addressable market.

“The new product combines fashion and fitness as it offers premium interchangeable bands and Fitbit's first color touch screen,” McClintock wrote. Fitbit has incorporated FitStar for the first time, and the new device will have three free FitStar workouts.

The Blaze features continuous heart rate monitoring, multi-sport mode, and SmartTrack exercise recognition. Moreover, it has core smartwatch features like call and text notifications, calendar alerts, and music control.

McClintock pointed out that the new device “fills a gap in Fitbit's product line” as it targets consumers who want a more stylish activity tracker as well as core smartwatch capabilities.

A key competitive advantage is that the Blaze has a long battery life of up to five days. “The Blaze should continue Fitbit's track record as the leader in the wearables' market with its technology and ecosystem as major drivers,” McClintock wrote.

The analyst added that Blaze could be only “the tip of the iceberg” for Fitbit in 2016. While the company may triple its R&D budget in FY15 from FY14, most of this budget is likely to be reflected more in products launched later this year, since most of Blaze’s features “are not radically new.”

In the report Barclays noted, “The market clearly was not excited by news of the launch, yet Fitbit doesn't launch products on a set calendar schedule in a similar manner as other tech companies.”

McClintock added that the weakness in shares represents “an attractive buying opportunity ahead of later product launches,” and that the new products launched later in 2016 should demonstrate more advanced fitness technology features.

Latest Ratings for FIT

DateFirmActionFromTo
Feb 2019UpgradesNeutralBuy
Feb 2019DowngradesOutperformNeutral
Oct 2018UpgradesNeutralOutperform

View More Analyst Ratings for FIT
View the Latest Analyst Ratings

Posted-In: Barclays Matthew McClintockAnalyst Color Long Ideas Reiteration Analyst Ratings Trading Ideas

 

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