Fitbit Q1 Earnings Preview: What You Need To Know

By | May 3, 2016

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Fitbit ( FIT ) is due for a health checkup late Wednesday and the prognosis for its first-quarter earnings report is looking favorable. But investors got the jitters on the eve of the company’s Q1 report. Fitbit stock fell 6.5% to 17.18 in heavy volume on the stock market today . Fitbit stock has tumbled more than 40% this year as competition has risen and the pace of growth has slowed. Analysts polled by Thomson Reuters expect the maker of wearable fitness devices to earn 2 cents a share excluding items on sales of $443.1 million. On a year-over-year basis, sales would be up 32% if it meets the consensus forecast. That would be down from 92% growth in Q4, 168% in Q3 and 253% in Q2. Fitbit made its IPO last June, pricing shares at 20. For the current quarter, Wall Street is modeling for Fitbit to earn 26 cents a share, up 24%, on sales of $532.8 million, up 33%. Pacific Crest Securities analyst Brad Erickson on Monday reiterated his sector weight, or hold, rating on Fitbit stock. Erickson expects a “beat-and-raise” quarter from Fitbit, but is cautious based on “longer-term views of poor category user trends, a lack of sensor differentiation and a more limited total addressable market.” In the near term, demand appears relatively healthy for the Fitbit Blaze smart fitness watch and the Alta activity tracker, he said. Fitbit also has stocked the retail channel with Charge HR devices for Mother’s Day sales, he said in a research report. Piper Jaffray analyst Erinn Murphy maintained her neutral rating on Fitbit with a price target of 16. “While data points during the quarter have been positive, with strong Amazon ( AMZN ) trends for the newly launched Alta and Blaze models, we remain on the sidelines behind the second-half weighted earnings (we estimate 70% of earnings lie in 2H) and given the tougher product launch comparisons in 2H,” she said in a report Monday. Mizuho Securities analyst Betty Chen kept her buy rating and price target of 20 on Fitbit stock in a report Monday. “Our recent survey highlights increases in Fitbit ownership as well as planned purchase intent at higher average selling prices,” she said. “Moreover, data indicates increased upgrade intent and attachment rate, with 21% of Fitbit device buyers purchasing at least one additional wristband in the last three months. We believe this bodes well for Fitbit’s long-term growth and margin profile.” Last week, diversified rival Garmin ( GRMN ) said its sales of wearable fitness devices rose 9% year over year in Q1, to $142.4 million, but profit margins declined because of intense competition in the category. Garmin also makes GPS navigation devices for automotive, aviation, marine and outdoor markets. In addition to Fitbit and Garmin, other companies competing in the health-and-fitness wearables sector include Apple ( AAPL ), Jawbone, Microsoft ( MSFT ) and Under Armour ( UA ). RELATED: Fitbit Bolsters China Prospects With E-Commerce Deal Scalper1 News

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