Zepp Health Corporation
Outgrowing the Market, Trading Below Liquid Assets
Published: July 22, 2026
Author: FRC Analysts
Disclosure: Zepp Health Corporation has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions.
Report Highlights
- Outgrowing the Market: Q1 shipments rose 20% YoY, in line with our estimate, and well above global smartwatch market growth of 4% YoY. Growth nearly matched Apple’s (NASDAQ: AAPL) 21% YoY increase, the strongest among leading brands.
- Revenue Beats: Revenue increased 34% YoY, exceeding our forecast by 4%, driven by higher shipments, and an 11% YoY increase in selling prices.
- Profitability Lags Growth: EPS of ($0.08) was flat YoY, and in line with our estimate, as higher operating expenses offset strong revenue growth.
- FX Impact: An 8% YoY decline in the US$ boosted revenue and expenses in Q1. With the dollar relatively flat YoY, we expect minimal FX impact in Q2.
- Margins Holding Up: Gross margins expanded 0.4 pp YoY to 37%, above wearable tech (36%) and consumer electronics (25%) averages. However, AI-driven demand is tightening memory chip supply, and raising component costs, creating a potential industry-wide margin headwind.
- Product Momentum: Nine products launched in 2025; management expects a similar number in 2026 (four launched YTD). Recent launches, including Active Max (fitness enthusiasts), Active 3 Premium (health-conscious consumers), and T-Rex Ultra 2 (outdoor adventurers), contributed to Q1 growth. The company subsequently introduced the Cheetah 2 lineup for marathon runners and trail athletes. Early reviews highlight long battery life, advanced fitness features, and strong value relative to higher-priced Garmin (NYSE: GRMN) and Apple products.
- Initial Q2 Guidance: Management’s initial Q2 revenue guidance of $63–68M (+10% YoY) came in below our expectations, prompting us to lower our FY2026 revenue growth forecast to 21% YoY (from 29%) and push our positive EPS forecast to 2027 (from 2026).
- Liquid Assets Exceed Share Price: Working capital and investments, net of long-term debt, totaled $147M ($10.25/share) at quarter-end vs the current share price of $5.29, implying the stock trades below net liquid asset value, suggesting substantial undervaluation.
- Valuation Disconnect: While the S&P 500 Consumer Electronics Index is up 6% YTD, ZEPP shares are down 81%, a disconnect we view as unjustified by the company’s fundamentals. The stock trades at just 0.14x forward revenue versus the sector average of 3.74x, a 96% discount.
Price and Volume (1-year)
* Zepp Health has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions. All figures in US$ unless otherwise specified.
Unit Sales & Key Metrics
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