Is FIT Stock in Trouble?
Fitbit Inc (NYSE:FIT) weathers another blow as Deutsche Bank AG (NYSE:DB) analysts downgrade FIT stock and cut their price target in half, from $18.00 down to $9.00 per share.
FIT stock, despite the news, remained relatively unchanged on Thursday, only falling about three quarters of a percent. But it’s still news that the struggling device maker hardly needs as 2016 comes to a close. Since the beginning of the year, FIT stock has fallen by 73%. (Source: “Fitbit Stock Price Target Sliced In Half As Demand For Wearables Slows,” ValueWalk, December 8, 2016.)
While Fitbit devices are doing well compared to smartwatches, that hasn’t translated into huge revenue increases this year. The wearable market has only seen about three-percent growth in Q3 according to an IDC Research, Inc. report.
And that helps explain Deutsche Bank’s move. Sherri Scribner, an analyst for the bank, wrote that she downgraded FIT stock to “hold” due to slow growth in the wearables market. Which makes sense. Fitbit might be outselling smartwatches, but it just doesn’t have the market potential, at least based on the current numbers.
Scribner also wrote that the recent acquisition of smartwatch maker Pebble Technology Corporation will have little impact due to the company’s size and limited momentum, though she still counted it as a positive.
With the potential shortage of new customers for the wearable device, Fitbit has been looking into other areas of expansion, particularly healthcare.
“Wearing a Fitbit should be able to save your life,” said Fitbit CEO James Park about the movement toward Fitbit as a medical aid. Combining information between daily activity, exercise, and glucose levels is the next step, according to Park. (Source: “Fitbit CEO says company’s future products ‘should be able to save your life’,” VentureBeat, December 8, 2016.)
Whether the shift toward medical features and gear will help pull FIT stock out of the hole remains to be seen, but one thing is clear: FIT stock needs some help.