Trading Nation

The technical and fundamental case for Fitbit

Trading Nation: Healthy outlook for Fitbit?

Fitbit is starting to look awfully healthy.

Shares of the personal fitness device maker surged 12 percent Wednesday after the company announced a major deal with Target. It also got a boost from an announcement that it was in compliance with a law governing health information safeguards, which could allow Fitbit to do deals with more companies.

Read MoreTarget's Fitbit offer to workers may miss its mark

The Target deal "signals a secular shift towards connectivity enabling companies to engage with their employees to encourage healthier lifestyles, as well as increase presenteeism—so getting people more productive at work—as well as just allowing companies to basically show that they really care about their employees," Pacific Crest analyst Brad Erickson said Wednesday on CNBC's "Power Lunch."

"Fitbit is an early leader in that market, and we do like the fact that they're bringing their brand exposure from the consumer market over to that corporate channel, and we do think that there's a lot of potential upside in the name because of that," he said.

Read More Target's Fitbit offer to workers may miss its mark

Erickson initiated coverage of the stock on Monday, slapping it with an "overweight" rating and a $47 price target. It closed Wednesday at $37.10.

It hasn't been a great few weeks for the company, which went public in June and is still down nearly 30 percent from its early August peak. Erickson blames the slide not just on weak earnings, but also on "overdone concerns" surrounding the Apple Watch.

Why overdone? Well, Apple's product is in an "adjacent category" and selling at a "different price point," he said.

Read More Why Fitbit is about to stop dead in its tracks: Expert

A Fitbit Surge
Chris Ratcliffe | Bloomberg | Getty Images

Meanwhile, for the even-more-bullish Jim Duffy of Stifel, the company's compliance capabilities with the U.S. Health Insurance Portability and Accountability Act is a big deal.

That law, known as HIPAA, requires procedures for the confidentiality and safe treatment of certain health information. Duffy sees the company's compliance capabilities as a major coup.

"Fitbit compliance with HIPAA allows for Fitbit to expand its Corporate Wellness offering by enabling Fitbit to support health & wellness initiatives of HIPAA covered entities, and allowing greater integration with HIPAA covered health plans and self-insured employers," Duffy wrote in a note Wednesday.

If the company manages to make the most of its opportunities, including those in the "corporate wellness market," it is "plausible that shares could be valued at $84," Duffy wrote.

In that bullish scenario, the company earns $2.40 in fiscal year 2018, and investors value it at 35 times earnings, for some reason.

Taking a technical tact, Rich Ross of Evercore ISI takes a liking to the name as well.

Ross said Wednesday that "the stock has upside to key resistance at $40," which is the average price at which it has been trading since its IPO.

Read More Why Fitbit is about to stop dead in its tracks: Expert