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Bear of the Day: Fitbit (FIT)

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I last wrote about Fitbit (FIT - Free Report) as the Bear of the Day in February of 2017 when shares were trading around $6. Since then, the stock has traded between $4.50 and $7.30, never quite reaching the success that investors had hoped for.

After trailing 12-month revenues peaked at $2.3 billion in 2016, they have been flat-lined around $1.5 billion. And the stock is back to a Zacks #5 Rank on further erosion in earnings momentum.

90 days ago, the full-year 2018 EPS consensus was for FIT to lose only 11-cents. That has since moved back down to a loss of 29-cents.

New Hope from a Big Data Buddy

But Monday April 30 brought some good news and renewed hope for FIT bulls as the wearables company and Alphabet (GOOGL - Free Report) announced a partnership to explore the development of consumer and enterprise health solutions.

Fitbit and Google announced that they will work together to innovate and transform the future of digital health and wearables in an effort to create positive health outcomes for people around the world.

In their proposed partnership, Fitbit intends to use Google’s new Cloud Healthcare API to help the company integrate further into the healthcare system, such as by connecting user data with electronic medical records (EMR).

Combining Fitbit data with EMRs can provide patients and clinicians a more comprehensive view of the patient profile, leading to more personalized care. The companies will also look to help better manage chronic conditions like diabetes and hypertension by using services such as Fitbit’s recently acquired Twine Health.

Using Google’s Cloud Healthcare API, Twine can make it easier for clinicians and patients to collaborate on care, helping lead to better health outcomes and positive returns for employers, health plans and hospitals.

This alliance could be a game changer for FIT. While I write this report on the evening of the announcement, I have not yet seen any reports from Wall Street analysts about what they think.

If you are a FIT bull, or even thinking about buying some shares, this could be a very big week to watch for those reports.

If the investment bank analysts have a change of heart (or calculator) and start computing that Fitbit sales and profits could rise because of this deal, then the stock could indeed become a buy again.

The Zacks Rank will let you know as soon as the turnaround gets rolling.

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