Confidence in Fitbit (FIT) Increased after Boston NDR - Leerink Partners

Leerink Partners analyst, Steven Wardell, had Fitbit (NYSE: FIT) management on a non-deal roadshow which showed interest in corporate wellness programs, new product to be launched in 2016 and competition with Apple. No change to rating or PT.

Investors are taking a greater interest in Fitbit's Corporate Wellness line of business. Fitbit has announced several large corporate wellness enterprise sales, including a deal with Target that offers a subsidy on the purchase of Fitbit activity trackers to all 335,000 employees. Currently less than 10% of revenue, the line of business is growing rapidly and has a higher margin than does product sold through retail channels.

Employers value Fitbits today because they see relatively high engagement rates with employees using Fitbits as compared to other wellness programs.

Management cited examples of future complexity including new software capabilities for their fitness trackers and new sensors. We believe that new sensors for Fitbit could include sensors for sweat, blood oxygen, sunlight, temperature, stress, hydration level, and more. Management reiterated that Fitbit expects to launch new products in 2016 that they are excited about, which we interpret to mean products that enter at the high end of the price point range ($150-250) and that contain features that add sophistication to the products. We are looking to the forthcoming Consumer Electronics Show in early January for potential announcements from Fitbit.

The subject of Apple as a competitor was frequently raised by investors and Management responded that the Apple Watch and Fitbit products are in different categories. Management cited a recent analysis of Google searches that indicates that very few consumers who search on Apple Watch also search on Fitbit in the same session, which can be interpreted as meaning that searchers for one product generally have a low interest in the other product.

No change to Outperform rating and $81 price target.

For an analyst ratings summary and ratings history on Fitbit click here. For more ratings news on Fitbit click here.

Shares of Fitbit closed at $33.37 yesterday.

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