4-Quarter Review: Fitbit Beat EPS Estimates By 137%, But Stock Is Down 54%

Fitbit Inc (NYSE: FIT) continues to deliver quarter after quarter of blowout earnings, and the market just doesn't seem to care. Oppenheimer analyst Andrew Uerkwitz cares.

Uerkowitz pointed out Fitbit has delivered an average consensus earnings beat of 137 percent over the past four quarters. Yet despite the consistent earnings upside, the stock is down 54 percent in that time.

Uerkowitz believes market guidance expectations are finally appropriately set headed into Q2 earnings season, and Fitbit could be in the position to deliver data that will ease market fears about the long-term picture.

“Repeat customers, new product transaction, importance of digital health, and healthy gross margins could be areas where we get positive data points,” Uerkowitz explained in a note on Wednesday.

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Once the market is reassured about the future, he believes investors will shift their focus to Fitbit’s severe undervaluation.

Uerkowitz sees user engagement as the key element in Q2 earnings. He believes investors are still skeptical of the “stickiness” of the Fitbit market.

Oppenheimer sees Fitbit as the best-positioned company to take advantage of the digital health wave, and Uerkowitz noted Fitbit has participated in 105 clinical trials compared to only four for Apple Inc. (NASDAQ: AAPL)’s Apple Watch.

Oppenheimer has an Outperform rating on FitBit and a $25 price target for the stock. Shares traded recently around $13.50.

Disclosure: the author holds no position in the stocks mentioned.