Fitbit Inc (NYSE:FIT) is in the news after investment firm Stifel downgraded the stock to “Sell”. Stifel said in its report that Fitbit’s growth trajectory could face a “high hurdle”. The firm thinks Fitbit’s growth has been “underwhelming to date.” Fitbit stock is down about 8% since the start of this year.
However, investors should not lose all hope on Fitbit stock. The company is operating in an industry which would grow exponentially in the near future. According to an estimate, total market worth of the wearable industry is expected to cross $34 billion by the end of 2020. A report from IDC suggests that Fitbit and Xiaomi remain the market leaders in the wearable industry. In the third quarter, the smart wearable market grew by 7.3%.
Fitbit could also become an excellent buyout target in 2018. Several reports suggest that Samsung could buy Fitbit in the near future. Recently, Samsung’s president Young Sohn said in a statement that his company wants to make “major acquisitions” related to preventive health and related technologies. Fitbit is the best preventive health and technology company. In case of an acquisition, Fitbit stock could soar to new highs.
In November, Fitbit posted better-than-expected third quarter results. Revenue in the period came in at $393 million, versus the consensus estimate of $391.78 million. The company sold a whopping 3.6 million devices in the period. After the Q3 report, Dougherty & Co analyst, Charles Anderson, reissued a Neutral rating to the stock. Anderson thinks that Fitbit continues to rebuild its credibility in the Wall Street.
He also likes Fitbit’s expansion to the smart watch industry. Fitbit Ionic watch has added a lot of value in Fitbit’s portfolio. The watch monitors heart rate, sleeping patterns, and blood oxygen levels. The smart watch could become a key life-saving gadget. Doctors could prescribe their patients these smart watches and track patients’ health 24/7. Fitbit is making strides in the wearable OS and smart watch market. The company recently issued its first update for Fitbit OS platform for Fitbit Ionic smartwatch. The watch now has over 60 apps. The company is also partnering with Deezer to bring streaming music service to Ionic users next year.
Morgan Stanley analyst Yuuji Anderson recently gave a bullish outlook for Fitbit stock on the basis of strong third quarter results and the availability of Ionic watch.