Wedbush analysts have said they are “warming up” to Fitbit Inc (NYSE:FIT), despite the activity tracker maker disappointing with its second-quarter guidance after the bell on Wednesday.
Fitbit posted a narrower-than-expected adjusted loss of US$46mln, while first-quarter sales just beat estimates at US$248mln.
But the outlook for the current quarter (2Q) was well below what Wall Street had been looking for, with the company guiding for sales of between US$275-295mln and a loss of US$0.27-0.23 per share versus consensus of US$310mln and a loss of US$0.11.
READ: Fitbit shares fall as weak outlook overshadows 1Q sales beat
Wedbush number cruncher Alicia Reese says Fitbit is “in transition”, while she also notes the “stiff competition” from the likes of Apple Inc (NASDAQ:AAPL).
Still, there are a few things Reese likes about the firm, not least the recent tie-up with Google.
“The company has an excellent opportunity ahead with medical applications, particularly in collaboration with Google,” she wrote in a note to clients.
“While recent results have been relatively disappointing, we are warming up to Fitbit given the long-term potential surrounding its medical applications and related recurring revenue streams.”
Reese adds that Fitbit has been a little light on detail with regards to its subscription revenues plans and prospects, although she does expect some clarification from management this summer.
“Until then, we will conservatively remain on the sidelines as we continue to harbour concerns about demand trends for the company’s legacy products and its unclear product road map.
“We are therefore maintaining our Neutral rating and US$6 target.”
Fitbit shares were down 9.5% to US$4.96 in morning trade on Thursday.