Leerink Partners Reiterates Outperform After Fitbit (FIT) Unveils Alta

Leerink Partners maintained an Outperform rating on Fitbit (NYSE: FIT), and cut the price target to $33.00 (from $49.00), after the company unveiled the Alta, a welcome upgrade to Fitbit's low-tier products. The $130 device incorporates features from Fitbit's Mid Tier products and is a replacement for the Charge which will be discontinued. Leerink likes the positioning of the Alta, which provides expanded notifications (text and calendar in addition to calls), an OLED screen that can be personalized, stylish band options, and a new 'Reminders to Move' feature. With the potential for upgrades of early Fitbit buyers, a more compelling device for only $30 more than the Flex, and the addition of another accessory line, Fitbit should experience a positive sales mix shift.

Analyst Steven Wardell commented, "This morning FIT unveiled the Alta, a welcome upgrade to Fitbit's low-tier products and in line with our estimates. The $130 device incorporates features from Fitbit's Mid Tier products and is a replacement for the Charge which will be discontinued. We view the Alta as ASP accretive as we see potential for upgrades from Flex/ Charge owners as well as first time buyers skipping over the $100 Flex, but GM dilutive at least initially. Next up is 4Q15 earnings on 2/22. We maintain our estimates toward high end of the Street and reiterate our OP rating. However, we are reducing our PT to $33 from $49 as we assign a lower 20x multiple to reflect widespread multiple compression, but still a premium to consumer electronic peers considering its growth profile."

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