Morgan Stanley bullish on new Fitbit products, holiday outlook

After Fitbit (FIT) yesterday introduced two new fitness wristbands - Fitbit Charge 2 and Fitbit Flex 2 - and unveiled new software features for its existing products, Morgan Stanley was upbeat about the news. The firm predicted that Fitbit would have a very good holiday season and report "strong" fourth quarter results. NEW PRODUCTS SEEN AS POSITIVE: Fitbit's new products should enable it to report "strong" fourth quarter results, wrote Morgan Stanley analysts Jerry Liu and Katy Huberty. Charge 2's display is four times larger than the previous model and it has "numerous new software features," including multi-sport tracking, the analysts wrote. Flex 2 is 30% smaller than its predecessor and is "swim-proof," they noted. Moreover, the company has added many new accessories, which should increase its revenue per device and margins over time, Liu and Huberty predicted. Meanwhile, the products' newer features have made them more personalized, which should increase Fitbit's user engagement and retention levels, the analysts stated. FITBIT CHECKS POSITIVE: Statements by Best Buy (BBY) and other retailers indicate that Fitbit is poised to have "a strong holiday season," the analysts stated. They kept a $31 price target and Overweight rating on the shares. WHAT'S NOTABLE: Fitbit's new products will increase the competitive pressure on Garmin (GRMN), which also makes fitness trackers, warned Goldman Sachs' Simona Jankowski. She reiterated a Sell rating on the name. PRICE ACTION: In late morning trading, Fitbit rose 3% to $15.40, while Garmin dipped 0.6% to $49.85 per share.