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.
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.
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.