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On Wednesday, shares of Fitbit closed more than 6.2% higher, extending the stock’s current winning streak to seven consecutive trading periods. Now, as this wearable tech giant appears to be picking up some much-needed steam, investors are starting to wonder just how high Fitbit can climb.
Today’s gains come on the back of the news that Fitbit, along with rival Apple (AAPL - Free Report) and several other companies, has been chosen to participate in a new FDA program. According to the agency, this group will pilot a “digital health software precertification” study that will explore a faster process for approving medical software.
The program has been interpreted as good news for Fitbit, which should stand to benefit from further legitimization of its technology and a more efficient regulatory process for medical technology. The wearables industry seems to be headed down a health-first route, and Fitbit could be poised to emerge on top.
With that said, however, Fitbit shares have now gained nearly 12% over the span of their current winning streak, and on Wednesday, the stock hit a 6-month intraday trading high of $7.09 per share. This kind of momentum has become a rarity for FIT, so it’s natural that investors are starting to wonder how high the stock can surge.
To get to the bottom of this, let’s first take a glance at Fitbit’s six-month chart to see how its current share price stacks up against its mid-term moving averages:
As we can see, we’re in relatively unchartered territory for FIT. The stock has had a rocky six months, and it has only really been resting comfortably above these moving averages for the past month. This recent resilience could be a sign that FIT is here to stay, but we also don’t have the most evident trends to work with.
One thing to note is that we have seen a few “mini runs” in September that have watched the stock break to new six-month highs. In each case, we see a short correction to the downside, but that has not stopped FIT from surging higher quickly.
Moving away from the chart, investors should also recognize that FIT could be seeing the effects of a short squeeze. According to Finviz, short interest is nearly 33% of float, and although that isn’t necessarily outrageous, it would mean that Fitbit is a favorite among shorts right now. And of course, what could have been a minor squeeze can be exacerbated by more positive news.
The FDA’s new program is an example of that type of news, but we also know that earnings reports can also be major catalysts. We’re still some time away from Fitbit’s next earnings announcement—in fact, we expect the company to report again on November 1—but let’s take a look at how the latest analyst snapshot to get a sense of what we’re in for:
Interestingly enough, despite the fact that we’ve seen more negative revisions than positive revisions, Fitbit’s current-quarter Zacks Consensus Estimate has improved over the past 60 days—and that is also the case for the company’s next-quarter earnings estimates.
The Zacks Rank is heavily dependent on earnings estimates and earnings estimate revisions, so this somewhat mixed snapshot has contributed to the stock’s Zacks Rank #3 (Hold). Nevertheless, it’s always a good sign to see consensus estimates approving over time, and investors should keep an eye on this trend as we get closer to Fitbit’s earnings date.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
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How Much Higher Can Fitbit (FIT) Stock Climb?
On Wednesday, shares of Fitbit closed more than 6.2% higher, extending the stock’s current winning streak to seven consecutive trading periods. Now, as this wearable tech giant appears to be picking up some much-needed steam, investors are starting to wonder just how high Fitbit can climb.
Today’s gains come on the back of the news that Fitbit, along with rival Apple (AAPL - Free Report) and several other companies, has been chosen to participate in a new FDA program. According to the agency, this group will pilot a “digital health software precertification” study that will explore a faster process for approving medical software.
The program has been interpreted as good news for Fitbit, which should stand to benefit from further legitimization of its technology and a more efficient regulatory process for medical technology. The wearables industry seems to be headed down a health-first route, and Fitbit could be poised to emerge on top.
With that said, however, Fitbit shares have now gained nearly 12% over the span of their current winning streak, and on Wednesday, the stock hit a 6-month intraday trading high of $7.09 per share. This kind of momentum has become a rarity for FIT, so it’s natural that investors are starting to wonder how high the stock can surge.
To get to the bottom of this, let’s first take a glance at Fitbit’s six-month chart to see how its current share price stacks up against its mid-term moving averages:
As we can see, we’re in relatively unchartered territory for FIT. The stock has had a rocky six months, and it has only really been resting comfortably above these moving averages for the past month. This recent resilience could be a sign that FIT is here to stay, but we also don’t have the most evident trends to work with.
One thing to note is that we have seen a few “mini runs” in September that have watched the stock break to new six-month highs. In each case, we see a short correction to the downside, but that has not stopped FIT from surging higher quickly.
Moving away from the chart, investors should also recognize that FIT could be seeing the effects of a short squeeze. According to Finviz, short interest is nearly 33% of float, and although that isn’t necessarily outrageous, it would mean that Fitbit is a favorite among shorts right now. And of course, what could have been a minor squeeze can be exacerbated by more positive news.
The FDA’s new program is an example of that type of news, but we also know that earnings reports can also be major catalysts. We’re still some time away from Fitbit’s next earnings announcement—in fact, we expect the company to report again on November 1—but let’s take a look at how the latest analyst snapshot to get a sense of what we’re in for:
Interestingly enough, despite the fact that we’ve seen more negative revisions than positive revisions, Fitbit’s current-quarter Zacks Consensus Estimate has improved over the past 60 days—and that is also the case for the company’s next-quarter earnings estimates.
The Zacks Rank is heavily dependent on earnings estimates and earnings estimate revisions, so this somewhat mixed snapshot has contributed to the stock’s Zacks Rank #3 (Hold). Nevertheless, it’s always a good sign to see consensus estimates approving over time, and investors should keep an eye on this trend as we get closer to Fitbit’s earnings date.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>