Dougherty & Co Downgrades Fitbit (FIT) to Neutral on Valuation
Dougherty & Co downgraded Fitbit (NYSE: FIT) from Buy to Neutral on valuation following Q2 results.
Analyst Charles Anderson commented, "Fitbit is delivering impressive growth and silencing the doubters that said competition would eat into its business in the near-term. We see many reasons to believe trends will hold throughout 2015 thanks to easy YOY comparables from a product breadth perspective. That said, shares closed Wednesday at 54x our FY16 EPS estimate and 5.6x EV/S our FY16 revenue estimate. If the stock moves to $45, it would still be trading 49x our FY16 EPS estimate. We believe that in order to justify a Buy rating (or a PT above $50), we'd need to get comfortable with $1.50+ of annual earnings power vs. our current FY16 EPS estimate of $0.92 and our FY17 EPS estimate of $1.26. Thus, we are going to move to the sidelines for now. A compelling new product or move into an adjacent market would probably be the likeliest candidate that would get us to revisit our estimates."
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Shares of Fitbit closed at $51.64 yesterday.