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Why Huami Corpoartion Stock Jumped 56.9% in February

By Keith Noonan – Updated Apr 12, 2019 at 5:11PM

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A new-product leak and broader market momentum helped send Huami stock soaring last month.

What happened

Huami Corporation (HMI 5.64%) stock gained 56.9%% in February, according to data from S&P Global Market Intelligence. Like many other Chinese tech stocks, the wearable devices company saw its valuation hit hard in the latter half of 2018, but more optimistic sentiment for sector and the broader market has helped it post gains in 2019. 

HMI Chart

HMI data by YCharts

Huami stock also saw positive momentum as a result of anticipation for a new product reveal that was teased in an online-retail leak. Shares are now up roughly 38.5% from their closing price on the day of the company's initial public offering in February 2018 and up roughly 54% year to date. 

A person wearing a Huami fitness tracker underwater.

Image source: Huami.

So what

Huami's AmazFit line of smart watches has gotten generally favorable reviews, and it looks like a pre-sale online-retail listing for the company's AmazFit Bip 2 smartwatch that detailed the wearable device's specs signaled that an official unveiling for the project was on the horizon. The company then presented at Mobile World Congress in Barcelona late in February and showed off the AmazFit Bip 2.

Check out the latest earnings call transcript for Huami Corporation.

Now what

Huami has given up some of last month's gains in March, with shares trading down roughly 18.9% so far. Sell-offs for the broader market appear to have been the main catalyst for the decline. 

HMI Chart

HMI data by YCharts

Huami is scheduled to report fourth-quarter and full-year earnings before the market opens on March 14, and it expects sales for the period to be up roughly 51% year over year. Tech hardware has historically been a difficult market to maintain a long-term competitive edge in. However, wearable technologies have a long runway for growth, and Huami is also partnered with Chinese hardware giant Xiaomi, so it's not unreasonable to think that its stock could have substantial upside trading at roughly 11 times 2019's expected earnings and 1.2 times expected sales.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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