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Analyst Upgrades Fitbit Ahead Of Push Into MedTech Space

Analyst Upgrades Fitbit Ahead Of Push Into MedTech Space

Fitness tracker Fitbit Inc (NYSE: FIT)'s announcement it will enter the health care and medical technology space is a bullish catalyst for the stock.

The Analyst

Wedbush analysts led by Michael Pachter upgraded Fitbit from Neutral to Outperform with an unchanged $6.50 price target.

The Thesis

Fitbit on Sept. 19 launched a new connected health platform called Fitbit Care, which combines health coaching and virtual care through a new app. The new massive opportunity marks a reversal from the company's earlier reputation as being a "one-trick pony" that focuses only on fitness trackers.

The analysts said Fitbit's decision to work directly with employers, health plans and health systems creates a win-win scenario. The company should see higher device sales along with a recurring subscription stream for the app. Meanwhile, the cost-benefit tradeoff for employers and health plans are likely to be favorable as it could push insurance premiums lower and encourage workers to live a healthier life which in turn improves work productivity.

Fitbit isn't ignoring its roots and its new Charge 3 watch is likely to be a winner in the upcoming holiday shopping season, the Wedbush note said, especially among the new medtech enterprise customer segment given a more favorable price point versus the competition.

The new recurring revenue stream justifies a bullish stance on the stock.

Price Action

Shares of Fitbit were trading higher by more than 4 percent to $4.70 at time of publication.

Related Links:

Morgan Stanley Stays Bearish On Fitbit After Apple Watch Unveil, Says Revenue Is The Real Concern

Fitbit's 'Test' Will Come In The Second Half, Says Bearish BofA

Latest Ratings for FIT

Dec 2020Morgan StanleyDowngradesEqual-WeightUnderweight
Nov 2019DA DavidsonDowngradesBuyNeutral
Nov 2019CitigroupUpgradesSellNeutral

View More Analyst Ratings for FIT
View the Latest Analyst Ratings


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