Fitbit (FIT) Sell-Off Overdone - Piper Jaffray

Piper Jaffray analyst Erinn Murphy came out to defend Fitbit (NYSE: FIT) which is down 11.8% after announcing the new Blaze model at CES.

Murphy commented: "We just left Fitbit's press conference, hosted in conjunction with CES, where we watched CEO James Park and Chief Revenue Officer Wood Scal unveil Fitbit's latest product--Fitbit Blaze. We demoed the Blaze product and came away impressed by the product and the balance the company has struck between price point and functionality. Following the press conference, we spoke with management on its vision for the product. Below we unpack why we think the stock is selling off, but the bottom line is this sell-off appears overdone. We are buyers on the weakness. We believe FIT had a strong holiday and see the addition of the Blaze as the net positive to ASPs and potential upside to our FY16 estimates. The Blaze is set to retail at $199.99, with 5 days of battery life, and is set to launch globally in March although product is available for pre-order starting tomorrow."

On why the stock sold off, the analyst opined: "Despite the compelling price point, the superior battery life of the Fitbit blaze, the shorts are pressing FIT today on the news. We think this in part tied to three reasons: 1) there was no pre-announcement regarding Q4 trends; 2) the product was similar to the Apple Watch in some respects and shorts believe FIT & AAPL cannot co-exist--particularly if FIT goes into the "smartwatch" arena; and 3) there were concerns around overall price point implications for the suite of product given the Surge is at $250. From our perspective, the Blaze has a solid balance between battery life, the price point & strong global distribution. Additionally, FIT is compatible with over 200 devices and Android & iOS platforms. FIT's retail partners have seen the Blaze & we think it has been well received thus far. We think R&D teams have been working on Blaze for the last 2 years."

They are buyers on the weakness and believe Blaze will lift overall ASPs in 2016.

The firm maintained an Overweight rating and price target of $60.00

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 $29.76 yesterday.

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