Fitbit Inc (NYSE:FIT) Consolidates After Strong Gains

After recording strong gains in last week, the stock price of Fitbit Inc (NYSE:FIT) declined 0.32% on Monday to start the week mildly in red. The stock posted strong gains on the positive news of a new corporate client.

The details

Fitbit stock has increased almost $2.5 billion in valuation on an agreement that has impact of as much as $20 million in revenue. For investors planning to invest at this time should know that the stock decline toward the $30 mark offered the ultimate entry point. With bullish analyst coverage and good corporate news, the stock surged higher this week showing another solid instance of buying on dips of good quality stocks.

Back in August, the stock was a bit expensive trading near $45 per share, but with a decline of more than 30%, there is a significant change in the equation. The FIT stock is once again moving towards $40 mark.

The impact

The interesting as well as surprising news is that the retailer firm Target Corporation (NYSE:TGT) has adopted the Fitbit platform for enhancing corporate wellness. The retailer intends to deploy the interactive platform to turn wellness and health into a healthy competition amongst its employees so as to reduce healthcare costs.

The agreement involves Target Corporation providing employees the Zip or subsidizing of more expensive items. At $60 per worker, the revenue prospective would be up to $20 million, considering Fitbit offers same price per device. The company avails extended margins as it saves retail cut from corporate accounts. All the reports indicate Target is offering to buy the fitness tracker items and not outright purchasing them. It indicates a lower purchase price than 335,000 device order.

Analysts predicts Fitbit Inc (NYSE:FIT) recording revenues of more than $900 million for the second quarter of fiscal and therefore, one large corporate deal cannot be termed as a game changer.

 

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John Eisler

John Eisler

John is a special projects and general assignment reporter, noted for breaking several exclusive stories.