Fitbit Rises; Citi Raises 1Q Ests. on 'Encouraging' Device Sales
Comment of the Day

April 13 2016

Commentary by Eoin Treacy

Fitbit Rises; Citi Raises 1Q Ests. on 'Encouraging' Device Sales

This note by Stephen Sweeney for Bloomberg may be of interest to subscribers. Here is a section:

Fitbit’s initial Alta, Blaze device sales are “encouraging” and app rankings are improving, says Citi analyst Stanley Kovler in note; reiterates buy, PT $30.

Citi raises adj. EPS est. to 4c from 1c, rev. est. to $460m from $430m

Avg ests. adj. EPS 2c, rev. $432.7m: Bloomberg data

Cleveland Research analyst Ben Bollin says in note “research suggests FIT sales finished ahead of partner expectations for 1Q16, driven by strong Blaze demand”

FIT rises as much as 8.5% to highest since Feb. 22 on 0.7x 3-month avg daily vol.

Eoin Treacy's view

Fitness trackers and wearables generally remains a fast growing but highly competitive sector. Fitbit is the dominant player not least because of the appeal of its mobile app. 

In much the same way Apple and Android lock users into an ecosystem because they do not wish to lose the apps they have paid for and moving contacts and photos between devices is a palaver, Fitbit’s app records heart rate, sleep patterns, weight loss, diet and exercise routine. Of course that only has attraction for people who engage with the app on an ongoing basis but it means loyal customers are retained. 

The share rallied today to break the progression of lower rally highs and a sustained move below $15 would be required to question potential for additional upside. 

Garmin is now pulling away from the region of the trend mean and similarly a clear downward dynamic would be required check momentum. 

Elsewhere GoPro which represents perhaps the most accessible play on drones rallied to test the upper side of a two-month range. 

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