What to Expect From Fitbit Earnings

Fitbit Inc. (NYSE: FIT) is expected to report its second-quarter financial results after the markets close on Tuesday. The consensus estimates from Thomson Reuters call for $0.11 in earnings per share (EPS) on $578.48 million in revenue. In the same period of last year, EPS of $0.21 and $400.41 million in revenue were posted.

Earlier this quarter, Wedbush said it believed that Fitbit shares were undervalued given a long runway remaining from an installed base perspective, as well as relatively untapped accessory, co-branding and corporate wellness opportunities. The firm believed that these positive factors outweigh the risk of commoditization over the next few years and a seemingly slowing pace of technological innovation. Ultimately Wedbush issued an Outperform rating with an $18 price target.

This call came after Fitbit reported a solid first-quarter earnings beat. However, there was a small problem in the report. Guidance for second-quarter earnings aimed significantly lower than estimates ($0.08 to $0.11 in EPS versus a $0.26 EPS estimate), although revenue guidance beat estimates.

If this earnings report is anything like the last one, strong growth and defensibility of the business will continue to be powered by product innovation, the network effects of community, expanding global distribution and investment in the brand. Based on the first quarter’s performance and momentum, management said that it is confident about the remainder of the year.

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A few analysts weighed in on Fitbit prior to the release of the earnings report:

• Wedbush reiterated an Outperform rating with an $18 price target.
• Robert Baird reiterated a Neutral rating with a $16 price target.
• Piper Jaffray has a Hold rating with a $16 price target.
• Oppenheimer reiterated an Outperform rating with a $25 price target.
• Doughtery reiterated a Neutral rating.
• Wells Fargo initiated coverage with a Market Perform.
• Citigroup reiterated a Buy rating with a $20 price target.
• Leerink Swann reiterated a Market Perform rating.

So far in 2016, Fitbit has vastly underperformed the broad markets, with the stock down over 50%. Over the past 52 weeks, the number only gets worse, with the stock down 71%.

Shares of Fitbit were trading up 0.5% at $13.76 on Tuesday, with a consensus analyst price target of $21.63 and a 52-week trading range of $11.65 to $51.90.

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