It’s not unusual to hear some bullish price targets from Wall Street firms. Just last week, Credit Suisse said it thought the high-flying Tesla Motors (TSLA) had another 49% upside from current levels.
But that’s nothing compared to Fitbit (FIT) stock, which has 116% upside, according to Piper Jaffray. Fitbit’s been a hot stock since day one, when it jumped 50% in its first day of public trading back in June.
But through last Friday, FIT stock had lost all of its initial luster, and was actually trading 6% below its day one closing price.
But Piper Jaffray thinks the wearable fitness device maker is massively undervalued by Wall Street, expecting FIT stock to soar well past its all-time highs to $60/share.
Erinn Murphy of Piper Jaffray thinks strong holiday sales will force the market to realize the full value of the company, and in turn send the FIT stock price soaring. She goes on:
“During Black Friday, while four of the five major SKUs were promoted, we believe this was on plan and our checks suggest levels sold down well. More importantly, Flex (the highest margin SKU by our belief) was full-price throughout the weekend. On Sunday, all pricing moved back to full-price in a disciplined fashion. In London, FIT was not promoted. At John Lewis for example, Fitbit was full-price and Misfit was 65% off and Withings was 25% off.”
It’s certainly hard to deny that Fitbit devices are popular. The Apple (AAPL) Watch doesn’t seem to have slowed down sales at all, and in the third quarter FIT far exceeded expectations, posting revenue of $409 million, 168% better than the year-ago period.
Earnings per share were 24 cents, cruising past Wall Street’s expectation for 10 cents per share.
Interestingly enough, Piper Jaffray wasn’t the only Wall Street firm getting uber-bullish on FIT stock. Barclays analyst Matthew McClintock upgraded FIT stock from “equal weight” to “overweight,” giving shares a $49 price target. While that’s merely a 76% premium to its closing price on Friday, it’s still an eye-popping runway nonetheless.
Specifically, McClintock noted Fitbit’s strong start to the holiday shopping season, and brushed off competitive concerns related to the Apple Watch, noting that FIT saw revenue growth actually increase in Q2 and Q3 of 2015 when compared to the same periods last year.
A retailer’s favorite time of the year is the holiday season, and it looks like this is when it’s all starting to come together for Fitbit and FIT stock holders.
I’m bullish on the company going forward for many of the reasons that Wall Street is: A best-in-class brand in a rapidly growing industry (and a tendency to wallop analyst estimates) makes for a good buy in my book.
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