Fitbit Is Crashing, But Mizuho Believes Initial Charge 2 Sales Are 'Strong'

Fitbit Inc (NYSE: FIT) is the world's biggest seller of activity trackers. The Fitbit Charge 2 has been called the best fitness tracker ever by Gizmodo, but The Verge said bugs plagued the product.

Investors are seemingly concerned with Fitbit's new product sales, with the stock plummeting nearly 10 percent Thursday. Despite investor concerns surrounding Fitbit's Charge 2 sales, Mizuho weighed in midday Thursday, sharing that it believes initial sales have been strong after initial channel checks.

"Our checks across several retailers point to favorable reviews and strong sell through including nearly 300 reviews on Amazon with a 4 star ranking," said Betty Chen.

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Fitbit Q3 guidance conservatively assumes minimal sell-through of its new products. The company previously cited the margin profile of new products slated for 2016 to be consistent with prior guidance, with gross margins in the range of 48–49 percent.

Mizuho believes the rollout of new customizable accessories and wristbands "should provide a healthy, accretive margin."

Mizuho maintains a Buy on Fitbit with a $20 price target.

At time of publication, Fitbit was down 10.81 percent on the day, trading at $14.89.

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