Why Fitbit Inc (NYSE:FIT) Prospects Look Bright This Holiday

Why Fitbit Inc (NYSE:FIT) Prospects Look Bright This Holiday

Fitbit Inc (NYSE:FIT) could end up with a stronger holiday quarter this year as researchers predict solid demand for fitness wearables. Other than overall strong demand for fitness bands, Fitbit’s large market share is also seen as a boon this holiday.

Fitbit controlled 23% of the wearables market share at the end of 3Q16, an increase from market share of 21.4% in the like quarter a year ago, according to IDC. That jump in market share came as Fitbit reported an 11% increase in product shipment in the latest quarter.

Fitbit not only controls a large portion of the wearable market, but its leadership of the market also looks stable considering that its closest rival, Xiaomi which sells the Mi fitness wearable, only controls 16.5% of the wearable market.

“I’m bullish on the immediate and short-term prospects for fitness bands,” said IDC’s wearables research manager Ramon Llamas.

Fitness bands moving faster than smartwatches

The other reason analysts see Fitbit registering a solid holiday quarter performance is that the fall quarter offered a clue of strengthening uptake of fitness wearables. For instance, while the smartwatch category saw shipments down 52% in 3Q16, the fitness band category registered a 3.1% increase in shipments.

Analysts see the strong uptake of fitness bands witnessed in 3Q16 continuing into the holiday quarter, benefiting market leader Fitbit.

For FIT, a stronger holiday could also see the company surpass its internal sales outlook. The company is expecting sales in the band of $725 – $750 million. That compares with the consensus estimate of $741 million.

Apple Watch could bolster Apple

Apple Inc. (NASDAQ:AAPL) could also maintain its lead of the smartwatch market this holiday. Though the company’s share of the smartwatch market plunged to 41.3% in 3Q16 compared to 70.3% in 3Q15, the release of Apple Watch 2 just ahead of the start of the holiday season could offer a boost to the company’s wearable fortunes.

While Fitbit is fighting for market share in the fitness wearable category with Microsoft Corporation (NASDAQ:MSFT) and Nike Inc (NYSE:NKE) among others, Apple is trying to keep Garmin Ltd. (NASDAQ:GRMN) at bay in the smartwatch segment.

Fitbit stock dropped less than 1% in both regular and extended trading in the last session. However, the stock, which is changing hands in the vicinity of $7.98, is down more than 73% since the beginning of 2016.