Here’s What Fitbit Stockholders Should Be Watching for Today
It’s no secret that wearable technology is fast becoming one of the most popular consumer trends this year. But while Fitbit Inc. (NYSE:FIT) is at the forefront of this revolution, shares of FIT stock have been in the doldrums.
The enthusiasm with which U.S. consumers have adopted the wearable fitness device trend is rising fast. Indeed, according to market research firm Acquity Group, only seven percent of consumer used a fitness tracking device in 2014, but that number is now forecasted to jump to 28% by 2016. With this market expanding as quickly as it is, Fitbit will be well positioned to use its market-leading position to grow both earnings and revenue at a breathtaking pace. (Source: “12 Retail Trends and Predictions for 2015,” Vendhq, last accessed October 30, 2015.)
Fitbit’s earnings report this afternoon will prove pivotal in how things will unfold for the company going into next year. While there’s a great deal of discussion over the possible results, many analysts have been cautiously optimistic about Fitbit’s stock price forecast and predict a rise in FIT stock as the company is being more clear about its future growth.
This Could Be Huge for Fitbit Stock
Fitbit has found a remarkable way to leverage its products through the creation of the Fitbit wellness program. Its platform provides software, hardware, and services to partnered companies looking to increase the health of their employees.
These partnerships are rather attractive for firms because the savings brought on by ensuring their employees are healthier and happier is easy to quantify. Tired, unhealthy, and unhappy workers are unproductive ones, and when the economic bottom line is affected, you can bet that a corporation sits up and takes notice.
This is where Fitbit comes into play with its range of moderately-priced wristbands and associated integrated software options for monitoring health. Companies are promised lower overall healthcare costs for their workers, in exchange for initial investments in the form of subsidized wearable fitness devices for employees. Also the employees are incentivized to use their new devices through the implementation of various corporate competitions and challenges, where the more active teams are granted various rewards.
So let’s recap here: Fitbit gets to sell their products and expand its market share, employers reduce their overall operating costs and get more productive workers, and employees become healthier and happier.
Now that’s what I call a win-win situation as it establishes a solid foundation for an up-and-coming company with big aspirations.
Indeed, Fitbit reported last week that it had partnered with over 20 new companies to its corporate wellness platform. (Source: “Fitbit adds corporate challenges, signs on about 20 large employers in four months,” MobiHealthNews, October 20, 2015.) Far from being small firms, Fitbit is now doing business with the likes of Barclays, GoDaddy, and even Boston College. (Source: “Barclays to Shrink Staff in a New Way: 75,000 Fitness Trackers,” Bloomberg, October 20, 2015.) The announcement followed an earlier report that Target had announced its participation in Fitbit’s corporate wellness program, and that Fitbit bands would be available to its 330,000 employees.
With the Fitbit third-quarter financial results coming out very soon, these big-name contracts with large corporations will provide the foundation for higher guidance going into 2016.
Here’s the Bottom Line on FIT Stock
While forecasts are far from unanimous, analysts are generally estimating that Fitbit will report quarterly earnings per share of $0.10, and total yearly earnings per share of around $0.77, with revenue of $351.00 million. (Source; “Fitbit (FIT) Stock Looks Poised for a STELLAR Quarter,” InvestorPlace, October 30, 2015.) Forecasts for next year are growing more bullish, as analysts are predicting earnings per share to grow to $0.98.
With Fitbit’s recent gains with the corporate wellness platform, it would not surprise me to find out that the company exceeded third-quarter forecasts and lifted its guidance for 2015 as a whole. The odds of this many solid corporate customers being added without a corresponding rise in Fitbit’s business value seems unlikely. It’s for this reason among others that I remain highly bullish on Fitbit’s stock price.