Battle Of Fitness Trackers: Oppenheimer Rates Fitbit At Outperform, Garmin At Perform

Both have a diverse product line, but Apple Inc. AAPL and Garmin Ltd. GRMN are jockeying for space in the hot smartwatch market.

But one analyst says that the company solely dedicated to the space, Fitbit Inc FIT, which is expected to come out with a new model combining the best of both worlds fall, may be the one to watch.

Oppenheimer analyst Andrew Uerkwitz rated Garmin at Perform and Fitbit at Outperform, the latter “delivering another clean quarter and reiterating 2H confidence.”

“Despite the basic activity tracker market being under pressure, management delivered on its target of reducing US channel inventory as promotional pricing helped clear low-end Flex 2s to make way for 2H's smartwatch launch—still on track,” he wrote in an analyst note. “If management can deliver on product and financial targets in the near term, we think the stock looks attractive as our estimates have the company exiting 2017 with cash & equivalents of ~$600M (over half of current market cap) and an increasing murmur of activity exhardware.”

Garmin Is Good, Too

Garmin is, of course, like Apple, in more than just the fitness tracker/smartwatch segment that attracts physical fitness fans, particularly runners. In addition to fitness watches with dedicated GPS, it has compensated for its loss of market share in the automobile market to smartphones by expanding into high-end marine and aircraft global positioning systems.

Uerkwitz said Garmin beat market expectations in the air and marine sector, he said its own “top- and bottom-line consensus beat” was “driven primarily by Garmin's bread-and-butter: feature-rich, durable, high-quality wearables. Even more confidence-inspiring is Garmin's ability to continue growing its wearable business with yet-to-be-refreshed basic activity tracker offerings and a NPD estimated 32% 2Q Y/Y decline in the US basic activity tracker market.”

Uerkwitz set a price target for Fitbit at $8, while abstaining on a target for Garmin. The former was trading at $5.74, up $13.21 at publication. Garmin was at $52.15, down 7 cents.

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