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Fitbit Ripe For Takeover With Samsung And Apple's Commitment To Wearables

GRMN, SSNLF, AAPL | June 24, 2016

BlueFin’s John Donovan believes that there is evidence of too much inventory at Fitbit Inc (NYSE: FIT), as well as “a laser-like focus on sell through” ahead of the launch of newer models at the end of 2016.

Predictions Bearing Fruit

Donovan mentioned robust production cuts were expected immediately after the launch of Alta and Blaze.

The analyst had, therefore, cut the 2016 estimates for Fitbit as much as 10 percent below the consensus forecasts.

Donovan pointed out that the estimate cuts have now been realized, given the evidence of high inventory levels.

Intensifying Competition

“Fitbit has yet to see sustained share erosion from bargain options such as Xiaomi’s Mi Band devices, while the more expensive options from players such as Garmin Ltd. (NASDAQ: GRMN) and Apple Inc. (NASDAQ: AAPL) look to be in far better position with OS improvements and 3rd party apps which should concern FIT,” the analyst stated.

Donovan noted that given that market data implies that consumers are looking for solutions below $200, Fitbit’s portfolio would fit right in.

However, given the large Alta and Blaze inventories, especially in a competitive market, the analyst expressed concern regarding the company’s position.

“Add to this Samsung (SAMSUNG ELECTRONIC KRW5000 (OTC: SSNLF)) releasing a Gear Fit2 fitness band/GPS combo unit and the pressure is mounting on FIT,” the analyst went on to say.

Donovan also expressed concern for Fitbit, given that the competitive landscape was expected to become more intense going forward.

At Time Of Writing...

Fitbit closed Thursday trading up 3.91 percent at $13.29, but in Friday's pre-market session, the stock was down 6.70 percent to $12.40.
In Friday's pre-market, Apple was down 2.50 percent at $93.75.
Garmin was down 6.33 percent in Friday's pre-market, trading at $40.54.