Andrew Left Goes Long Fitbit, Sees 130% Upside

Fitbit Inc FIT was already on the rise Monday when Citron Research came out with a bullish report touting Fitbit as one of the best medtech companies in the industry and forecasting 130-percent upside.

“What was once a piñata for short-sellers (since IPO) has transformed itself to one of the most underappreciated med-tech stories in the market with a balance sheet and brand equity that gives investors a tremendous investing opportunity,” Citron’s Andrew Left wrote in a report.

Left predicted Fitbit will either strike $15 or be acquired, possibly by partner Alphabet Inc GOOGLGOOG, before the end of the year.

The Thesis

The crux of Left’s defense lies in Fitbit’s recent recognition by the Food and Drug Administration as a revolutionary digital health company. The FDA named Fitbit, along with another eight of 110 applicants, to its precertification pilot program for digital health software.

The firm intends to expand its tools to include afibrillation and sleep apnea detection devices this year.

“As Fitbit re-calibrates on Wall Street to a med-tech company, we will see perception and valuation change (alongside a slow grind up of fundamentals of the business),” Left wrote.

His bullishness is also justified by Fitbit’s forging of partnerships with insurance companies, Google for research and Dexcom, Inc. DXCM for glucose monitoring; establishment of a business model generating recurring revenue; and expense of more than $700 million in research and development since January 2016.

Notably, Left considers Fitbit immune to the Apple Watch threat given its universal compatibilities and relative inexpensiveness.

Price Action

At time of publication, Fitbit shares were trading up 19 percent at a rate of $7.56.

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