Fitbit Stock: 20% of the Analysts Recommend a ‘Buy’

Fitbit’s market share

Fitbit (FIT) is expected to gain market share in the global wearable space. Fitbit has managed to increase its shipments 36% this quarter by launching lower-priced products. However, the lower-priced products had a negative impact on the gross margins.

Wall Street analysts expect Fitbit’s sales to rise 3% in 2019, which indicates that shipment growth isn’t translating into revenue growth. Fitbit Health Solutions might be a revenue driver and account for $100 million in sales this year.

Fitbit Stock: 20% of the Analysts Recommend a ‘Buy’

Sign up for Bagels & Stox, our witty take on the top market and investment news, straight to your inbox! Whether you’re a serious investor or just want to be informed, Bagels & Stox will be your favorite email.

Stock returns

Fitbit has burned massive investor wealth over the years. The stock has fallen more than 80% since its IPO. The stock has declined 66% in the last three years. Fitbit has gained 8% in 2019 after posting impressive fourth-quarter results.

Analysts’ recommendations

Among the 15 analysts tracking Fitbit, three recommended a “buy,” ten recommended a “hold,” and two recommended a “sell.” Analysts’ 12-month average target price for Fitbit is $6.36. Analysts’ median estimate is $6.5. Fitbit stock is trading at a discount of 18% to analysts’ median estimate.

Is Fitbit a safe bet?

We’ll have to see if Fitbit can successfully stage a turnaround. Fitbit competes in a space that includes tech giants Apple, Samsung (SSNLF), and China’s (FXI) Huawei and Xiaomi.

As we discussed above, Fitbit Health Solutions will need to be a key revenue driver and account for a higher portion of the sales. Fitbit’s lower-priced devices should be a hit in emerging markets (EEM) in the Asia-Pacific and Africa regions and drive revenue over the next few years. The company needs to achieve profitability and keep investors interested.

There are many concerns regarding Fitbit. Investors will likely be in for a bumpy ride if the company misses its sales and earnings estimates.