Fitbit (FIT) is a leader in the wearable space, a market that is "just beginning," while the company should benefit from the tremendous growth of the fitness and digital health markets over the next 5-10 years, according to Oppenheimer analyst Andrew Uerkwitz. Given the coming opportunity, Fitbit's stock is undervalued, according to the analyst, who initiated coverage of the shares with a $25 price target and Outperform rating.

Eearly innings: Fitbit is best positioned to exploit the trends of real-time analytics and digital health, which are both in the early innings of adoption and technical development, Uerkwitz believes. Moreover, the company continues to be a leader in these markets, the analyst stated. In the near-term, Fitbit should benefit from international expansion, new product innovations and margin leverage, and there is no risk that its products will become commoditized, predicted Uerkwitz. Meanwhile, Fitbit's stock is priced as though the company is a "one-hit wonder," but this is misguided, given the tremendous growth outlook of its markets, the analyst stated.

What's notable: On January 27, Citi analyst Stanley Kovler started Fitbit with a Buy rating and a $35 price target, citing the company's "strong" growth prospects and international expansion. The company's results should be boosted by the expected release of a new fitness tracker in the second half of this year, he stated.

Price action: In late morning trading, Fitbit fell 1.4% to $16.44.