Fitness wearable device maker Fitbit Inc. (FIT) announced today that it has partnered with Target (TGT) in a deal that will give 335,000 Target employees a free Zip, Fitbit’s cheapest device that sells for $60. Employees could also purchase one of the more expensive devices, with Target subsidizing the cost. Teams of employees can participate in month-long fitness competitions, and winners can pick a charity to receive a $1 million donation. The deal with Target is Fitbit’s biggest wellness partner to date, and indicates Fitbit could sell a lot more of its devices to even more corporations the future.

The large order and the opportunity Fitbit has in selling its devices to corporations to lower their healthcare costs are the likely catalysts in Fitbit’s stock jumping over 12% today to close at $37.10 for the day.

Target isn’t the first company to partner with Fitbit either, as others such as Bank of America (BAC), Time Warner (TWX), and BP Oil (BP) all have deals with Fitbit that has their employees incorporate the wearables into their lives. One company, Appirio, reported that it was able to cut its healthcare costs by 6% in just one year where their employees used the devices. Fitbit reports that there are currently 50 of the Fortune 500 companies across a variety of industries that are Fitbit wellness customers.

Why Investors Should Be Aware of the Deal

Fitbit’s corporate services make up less than 10% of its revenues currently, but CEO James Park told Bloomberg recently that its “one of the fastest growing parts of the business”. Fitbit became publicly traded this year, and has since received criticism towards the company’s business model and even towards some of its products.

ABI research estimates that by 2018 over 13 million activity-tracking devices will be integrated into employee wellness programs, compared to just 200,000 devices in 2013, and Fitbit could provide a significant portion of those 13 million devices. Fitbit’s stock is down 26% in the past month, but the growth opportunity the company has in its corporate service sector could be just what Fitbit needs to stabilize its stock.

Bottom Line

Fitbit has been under pressure since its IPO due to concerns about high valuations, contracting margins, and a gradual loss of its market share to competitors like Apple’s (AAPL) watch, but if Fitbit can prove that it can continue to grow its revenues and expand sectors like its corporate wellness services sector, its stock could see positive growth in price as well. Investors should be aware of Fitbit’s stock as it is one that has great potential if the company can capitalize on its opportunities for growth and prove that it can dominate the fitness wearable device market.

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