This fitness company has opportunities to expand its mission, but it is in the midst of a turnaround. It did beat analysts’ estimates for the quarter, with a loss four cents less than expected, and The Benchmark Company has just initiated coverage on its shares with a ‘Buy’ rating. Lastly, eight analysts have increased their EPS forecasts in the past 30 days.
Fitbit (FIT)
From The Lancz Letter
Fitbit (FIT) is a long-term turnaround play that is currently offering attractive upside. What attracted us to Fitbit is the solid balance sheet with no debt and over $3 a share in cash. The fact that the stock is down approximately 90% from its high of 2 years ago illustrates that Wall Street has given up on the company despite its solid balance sheet.
Management has had its share of problems with product development and technological advances, but the big factor Wall Street is missing is the company’s still very loyal customer base. Fitbit has 23 million active users, and an estimated 50 million global customers. Management has stood by their products, and therefore their public retail reputation seems intact. The company needs to begin to monetize this solid customer base and build relationships with other companies to gain traction in the overall health/fitness market.
This will advance Fitbit from its current step counter reputation on Wall Street to an advanced health and fitness platform company with the corresponding valuation enhancement. Shares could advance 50% or more over the next 1 - 2 years if management can adopt this macro-vision.
Alan B. Lancz, The Lancz Letter, www.lanczglobal.com, 419-536-5200, May 4, 2017