Fitbit Inc (NYSE:FIT) recently announced its earnings for the fourth quarter of fiscal year 2015, surpassing market analysts’ estimates. The company’s reported revenue came in at $712 million, beating consensus estimate of $648 million. Reported earnings per share (EPS) came in at $0.35, which is $0.10 cents higher than the expectations of the market.

The management’s guidance for the first quarter of fiscal year 2016 disappointed the market as it was expecting much higher numbers. The company is investing heavily in the manufacturing and marketing of its new products, Alta and Blaze, which will lead to lower margins in the first quarter of the year. However, it is expected that the spending in the first quarter will pay off with higher margins in the later quarters. Moreover, the revenue guidance for full year 2016 was up to the expectations of the market, while guidance for EPS was much higher than the market prediction.

Mizuho Securities slashed its price target for Fitbit stock to$20 from $38 and maintained its Buy rating for the stock. The firm’s analysts lowered their price target on account of weak revenue guidance for the first quarter and increasing production cost due to new products.  However, the analysts are positive about Fitbit’s outlook for the long term as they believe that the company’s sales will grow and margins will increase in the rest of 2016. Moreover, they are also of the view that Fitbit will manage to increase its customer base in the local market as well as the international market in the long term.

Piper Jaffray’s analysts have the same concerns as Mizuho’s, highlighting the weak guidance announced by Fitbit management for the first quarter. The firm’s analysts have downwardly revised their rating for Fitbit stock to Neutral from Overweight, while reducing their price target to $14 from $24. Moreover, the analysts were also concerned about Fitbit’s new products, as sales in the other quarters are dependent on them. However, they remained positive about Fitbit’s overall long term outlook.