Fitbit: Citi Checks Show 'Significant' Expansion Opportunity After Earnings

Citi’s Stanley Kovler believes that Fitbit Inc FIT is a “relatively inexpensive” option to play “Out of Favor Tech,” with the share price having plunged over the past three to six months.

The analyst reiterated a Buy rating on Fitbit, with a price target of $30.

Blaze/Alta Sales Up

“We believe the encouraging initial Alta/Blaze sales and improving App rankings support our view that FIT’s CY16 rev guidance may prove conservative and expect upside to Q1 guide and positive Q2 outlook to propel shares off recent lows,” Kovler mentioned.

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Following the execution fails on product releases and product transitions, as well as the increased opex guidance for CY16, the analyst believes that the recent announcement that of the over two million sell-in for Blaze and Alta should covert into positive guidance for Q1 and Q2.

Global Expansion

Kovler also stated that Citi’s analysis of Fitbit’s app downloads rank supports the belief that “2016 is the beginning of significant global expansion for FIT as it expands its presence into new markets.”

The analyst expects revenues outside North America to rise to 29 percent of the revenues for CY16, from 25 percent in CY15, with analysis pointing to traction in EMEA and APAC.

The revenue and EPS estimates for Q1 have been raised “to reflect Blaze and Alta sell-in during March.”