Financial Trading Blog
Stock of the day 04/08/2015 – FitBit Inc
After its initial offering price of $20 on Wednesday 17th June, FitBit had already toyed with crossing the $40 within a week. Cut to the end of June, however, and the company had slipped to $33.21 as the stock lost some of its brand new sheen. This slip was not too last for long, with a bullish report from RBS Capital Markets seeing the analyst initiate coverage with an ‘outperform’ rating, causing a 25% jump across two days and putting it on a track that saw it reach a high of $48.96 by the middle of July.
(Source: IT-Finance.com 04/08/2015)
Following this run FitBit began to trail off once again, setting into a $44 to $47 trading bracket for most of the second half of July. However, the excitement that has been building in the run-up to the company’s second quarter report has seen investors pile into the stock across the end of July and the start of August, taking FitBit to a current price of $49.05 (IT-Finance.com, 04/08/2015) after hitting a high of $50.97 during Monday’s trading.
Yet for all its post-IPO success (and granted that is only around 6 weeks) the stock remains incredibly divisive. For whilst its sector is growing, so too is its competition; already in the first quarter FitBit’s market share fell from 45% to 34% off the back of rival Xiaomi’s jump from 0% to 25%. This still means FitBit tops the sector, but despite rapidly increasing sales it can only expect that market share percentage to slip as time goes on. Despite being in its infancy, at least on the markets, the company has some tough challenges ahead of it, and the true test of its mettle and longevity will be how it navigates the increasingly crowded fitness wearables landscape.
So what are investors likely to see come Wednesday? Well, increasingly tight margins are expected to take their toll on FitBit’s figures; however, analysts are still expecting respectable growth, with earnings per share of $0.07 alongside revenue of $319 million. And that is just the consensus; Mark Sue of RBC Capital (who still hasn’t cooled on the stock) is forecasting EPS of $0.17 with revenue of $325 million.
FitBit has a consensus rating of ‘Buy’ with an average target price of $46.73.
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