As Fitbit soars, what's the top 'wearable' stock?

Published Thu, Jun 18 20153:39 PM EDT

It was quite a debut for fitness wearable maker Fitbit. The stock opened Thursday more than 50 percent higher from it's IPO price of $20 a share. In terms of first-day performance, that makes it one of the 10 best debuts of 2015. Fitbit highlights a booming wearables market. Booming is putting it lightly. The number of devices shipped this year is expected to surge by 173 percent to 72.1 million, according to IDC. Gartner placed the size of the wearable technology market for 2014 at $8.6 billion and Fitbit was 8 percent of that. But a pie that big can't just belong to Fitbit devices and the new Apple Watch. So who else stands to benefit? And will this Fitbit stock surge last? First, we'll tackle the latter question. Software analyst Ed Maguire at brokerage CLSA held a great Q & A for clients last week with Jody Ranck, a health wearables expert and the CEO of patient care platform Unison Health. Read More Financial stocks break out midyear on Fed In the Q & A, transcribed in a research note obtained by CNBC Pro, Ranck raised some legitimate questions about Fitbit's future. Fitbit has a great brand name and first-mover advantage but the analyst noted the shocking churn rate for fitness wearables like the ones sold by Fitbit. Nearly 70 percent of users stop using the devices within the first year, according to Ranck. From the Q & A: "I think's sort of an interesting moment for the whole space with the Fitbit IPO to demonstrate that the market's beginning to take off, but also some of the concerns about Fitbit that come up with the churn rates and sort of lack of sustainable engagement with the devices." Ranck thinks the devices made by companies like Fitbit and private company Jawbone could very quickly become commodities and that would favor players making the software that powers the devices like Apple and Google . Fitbit does "have that very, very prominent position in the market, but I don't know if that's going to be enough to carry them forward. ... If you look at Google Fit, Apple HealthKit, ResearchKit, there's clearly a race for health data happening. And that's where the value migration is going. And it's not going to be a hardware play, that's just a commodity." The software storyline from the CLSA discussion doesn't bode well for another wearable maker with name recognition, Garmin . The stock has lost half its value over the last eight years as smartphones disrupted its core GPS mapping business. Some on Wall Street have hope that kind of displacement won't happen again with its wearable devices. Read More Hedge funds top 2014 gains with these stocks RBC Capital Markets upgraded Garmin shares in late January on the notion that all wearable companies will get an "Apple Watch" lift. The firm likes Garmin in particular on the theory that it will end up with higher margins than competitors because of the company's popularity in niche areas like golf and boating, according to RBC. But Garmin shares are down 10 percent since that call. In order to find Wall Street's favorite wearable plays, CNBC Pro looked at consensus 12-month price targets among analysts provided by FactSet. Fitbit doesn't have any analysts officially covering yet because of an IPO lockup period so we don't know how Wall Street feels about some of the challenges raised above. For Garmin, analysts are expecting a healthly gain of 8 percent in 12 months. But Wall Street seems to agree that it is the software makers that will benefit most from the surge in wearables. Google and Apple shares are both forecast to rise 15 percent over the next 12 months. —With reporting by CNBC's Michael Bloom .

UP by Jawbone (L) and Fitbit (R).

Source: Jawbone (L) | Fitbit (R)

It was quite a debut for fitness wearable maker Fitbit. The stock opened Thursday more than 50 percent higher from it's IPO price of $20 a share.

In terms of first-day performance, that makes it one of the 10 best debuts of 2015.

Fitbit highlights a booming wearables market. Booming is putting it lightly. The number of devices shipped this year is expected to surge by 173 percent to 72.1 million, according to IDC.

Gartner placed the size of the wearable technology market for 2014 at $8.6 billion and Fitbit was 8 percent of that.

But a pie that big can't just belong to Fitbit devices and the new Apple Watch. So who else stands to benefit? And will this Fitbit stock surge last?