How Analysts Rate Fitbit After Earnings

Fitbit Inc. (NYSE: FIT) reported its fourth-quarter financial results at the beginning of the week, but the results were somewhat mixed. On one hand the company had outstanding earnings, but these were absolutely devastated by guidance for the first quarter.

The company had $0.35 in earnings per share (EPS) on $711.6 million in revenue, which compared to consensus estimates from Thomson Reuters of $0.25 in EPS on revenue of $647.82 million.

In the fourth quarter the company sold 8.2 million connected health and fitness devices. Also revenue in the United States grew 100% year over year, EMEA grew 191%, APAC grew 6% and Other Americas grew 77%.

Active users grew, 152% to 16.9 million at the end of 2015, compared to 6.7 million at the end of 2014. Also the company added 18 million new registered device users in 2015, of which 13 million, 72%, were active users at year-end, and the total year-end 2015 registered device users was 29 million.

Despite such strong results, the guidance is what tanked this stock. Fitbit detailed in its report:

For the first quarter 2016, Fitbit expects several dynamics to drive results. For the first time in the company’s history, Fitbit will make a global launch of new products, Fitbit Blaze and Alta. Launching media campaigns around the world is expected to drive higher sales and marketing expenses for the quarter. Also, the timing of shipments into sales channels may result in the majority of reorders, especially for Alta, coming in the second quarter of 2016. The company also expects to incur additional manufacturing costs in the first quarter to maximize production of new products to meet expected demand, which is expected to impact gross margins in the quarter.

As a result, the company expects EPS to be in the range of $0.00 to $0.02 and revenues in come in between $420 million and $440 million. The consensus estimates call for EPS of $0.24 and $484.58 million in revenue.

Merrill Lynch said in its report that it’s like déjà vu all over again: “beats, raises, stock falls as it posted a large beat as expected but guidance raise was not as clean as previous quarters and higher operating and R&D costs grow.” Ultimately the firm maintained its Buy rating but lowered its price objective to $29 from $31.

A few other analysts weighed in on Fitbit as well:

  • S&P Capital IQ maintained a Hold rating but lowered its price target to $20 from $40.
  • Barclays has an Overweight rating and a $24 price target.
  • Mizuho has a Buy rating but lowered its price target to $20 from $38.
  • Baird downgraded it to Neutral and lowered its price target to $16 from $30.
  • Deutsche Bank lowered its price target to $28.
  • Pacific Crest downgraded it to Sector Weight from Overweight.
  • Leerink downgraded it to a Market Perform from Outperform and lowered its price target to $18.
  • Piper Jaffray downgraded it to a Neutral from Overweight and lowered its target price to $14 from $24.
  • Raymond James has an Outperform rating but lowered its price target to $23 from $25.
  • Stifel downgraded it to a Hold rating from Buy.
  • SunTrust Robinson has a Buy rating and lowered its price target to $20 from $25.
  • Cowen lowered its price target to $19 from $41.
  • FBN has an Outperform rating but lowered its price target to $25 from $50.

Shares of Fitbit were closed trading on Friday at $12.15, with a consensus analyst price target of $23.78 and a 52-week trading range of $11.91 to $51.90.