A major deal with a retail giant and a positive note from a Wall Street analyst are adding up to a profitable week for Fitbit, San Francisco.
Target announced it will join Fitbit Wellness and offer free Fitbit's activity trackers to its 335,000 United States employees, according to The Associated Press. Target is one of Fitbit's largest corporate accounts, according to a Target spokesperson cited in The AP report.
Target employees will receive Fitbit's Zip ($59.95), and Target will subsidize the cost for employees who prefer more expensive Fitbit models, according to a BloombergBusiness report. Workers who opt in will be organized into teams for a competition with the winning team able to select a charity to receive a $1 million donation.
On Tuesday, Piper Jaffray analyst Erinn Murphy reiterated an overweight rating on the stock and a $60 price target, according to TheStreet. She said Fitbit is gaining share as the market leader, and she sees the stock as compelling amid caution in the consumer tech area.
A recent report from the International Data Corp. shows Fitbit held the largest market share (24.3 percent) among fitness wearable vendors in the second quarter.
Fitbit stock (NYSE:FIT) climbed 20 percent this week after opening Monday's session at $33.13 per share and closing Thursday at $39.88. Fitbit stock is up 31 percent since June's initial public offering ($30.40). Fitbit reported revenue of $400.4 million and sold 4.5 million connected health and fitness devices in the second quarter.
On Wednesday, Fitbit announced its products are in compliance with U.S. Health Insurance Portability and Accountability Act (HIPAA). The move will allow the company's wellness division, Fitbit Wellness, to more effectively integrate with HIPAA-covered entities, including corporate wellness partners, health plans and self-insured employers.
“We prioritize protecting our consumers’ privacy and keeping their data secure,” Fitbit CEO James Park said in a statement. “Our compliance with HIPAA safeguards formalizes this commitment, and, more importantly, it creates opportunities for more effective relationships with corporate wellness customers.”
Fitbit Wellness is Fitbit's business-to-business offering providing turnkey software and services to aid wellness programs. Over 50 of the listed Fortune 500 companies are Fitbit Wellness customers, according to Fitbit. Customers include Adobe, BP, box, Boston College and GNC.
“By allowing a greater level of integration with HIPAA-covered entities, Fitbit Wellness can better serve our clients and partners, and their members and employees," Fitbit Wellness General Manager Amy McDonough said in a statement. "We are excited about this new initiative and believe it will allow Fitbit Wellness to serve a broader market, and is another step forward in achieving Fitbit’s goal of empowering users to lead healthier, more active lives."
Corporate customers make up less than 10 percent of Fitbit’s revenue, according to BloombergBusiness, but CEO James Park said that it’s “one of the fastest-growing parts of the business."
Fitbit offers employers a dashboard to monitor individual, team and company-wide metrics to track results related to the employer's wellness investment. The corporate wellness market is projected to be worth $11 billion by 2019, Park said on an August conference call with analysts.