Shares of Fitbit (FIT) are in focus in morning trading following a cautious report from an analyst at Morgan Stanley, who lowered his price target on Fitbit ahead of the Consumer Electronics Show in Las Vegas. In contrast, Roth Capital initiated coverage of the stock, saying that the value of Fitbit’s loyal installed base has been “largely lost on the Street.

“LACKLUSTER” CHECKS: Morgan Stanley analyst Yuuji Anderson and his team maintained an Equal Weight rating on Fitbit, but cut the price target to $6 from $7. In a note to clients, Anderson said “lackluster” checks by his firm showed that discounts on the Ionic smartwatch continue, leading to “some” improvement in demand, but the pace of functional improvements to its software/sensor ecosystem must accelerate to drive better product cycles. A major focus will be on CES 2018, which begins Sunday, January 7 and ends Friday, January 12, and Anderson said he expects new hardware launches to follow a similar cadence as 2017, in late Q1 and Q4. Anderson said he’s looking for better visibility into the direction of Fitbit’s app platform, which, while it has grown since launch, has not differentiated itself from rival platforms. For 2018, Anderson expects a product refresh for at least one of Fitbit’s “better-selling products” like the Charge 2 or Blaze, but is favoring “conservatism” on upcoming product cycles. He also sees a chance that Fitbit management authorizes additional cost savings initiatives to preserve its net cash position. The firm expects the stock will be weak in the near-term, weighed by a continued lack of confidence until new product cycles show significant improvements.

ROTH SEES VALUE “LARGELY LOST ON STREET”: Roth Capital analyst Scott Searle started Fitbit with a Buy rating and $10 price target, telling clients that the value of its loyal installed base has been “largely lost on the Street.” He does not think Fitbit is “just another broken consumer electronics company” and he believes the company could monetize its user data around healthcare and “digital therapeutics,” calling shares “attractively valued” and calling Fitbit itself a “pioneering supplier” of fitness trackers and wearable devices.