Fitbit stock pulled back on Thursday as Deutsche Bank analysts became the latest to downgrade it. They also slashed their price target in half, down from $18 to $9 per share. The news comes the same week as the company confirmed reports that it is acquiring Pebble, but Deutsche Bank sees no material gain from the acquisition.

Fitbit

Apple Watch has been no Fitbit killer

Earlier this week, IDC reported that the Apple Watch—which many said was destined to kill off Fitbit and other fitness-focused wearables—continues to lose share in the wearables market. Apple’s share of the wearable market declined to 4.9% in the third quarter, a remarkable plunge from the 17.5% share it held in the same quarter last year.

The iPhone maker sold 1.1 million watches, compared to 3.9 million in last year’s third quarter. However, Apple would have investors think differently because it claims that the sell-through numbers reached a record high and are a better representation than shipment numbers of how the Apple Watch is doing. Of course the company won’t release actual numbers for the Apple Watch, which some still find suspicious.

Apple’s main competitor Samsung isn’t faring much better, as it sold about 1 million smartwatches during the quarter. However, it did grow its share of shipments to above 4%, according to IDC.

Why Fitbit is beating the Apple Watch

Meanwhile Fitbit’s share of the wearable market jumped year over year, as did Garmin’s. One thing the two companies have in common is the fact that they make wearables that are much cheaper than the Apple Watch and the Samsung Gear, notes Bloomberg columnist Leonid Bershidsky, who believes the cheaper approach that focuses on one use is why Fitbit is beating Apple in wearables.

He notes that smartphones may have taken a bite out of the watch industry, and the Apple Watch has failed to revive it. He feels the cheaper wearables are easier to use and thus more accessible, in addition to being less expensive. He also believes that most people who are interested in wearables just want one geared toward fitness and don’t see a need for all the extras.

Fitbit stock tied to future of the wearables market

So if Fitbit is doing so well, why is its stock price so low? Deutsche Bank analyst Sherri Scribner answered this question in her research note dated Dec. 7. She downgraded Fitbit stock to Hold from Buy due to slower growth in the wearables market. In other words, even if you’re the best of the best, you can’t become the next Apple if the market you are in is tiny.

Scribner also cited IDC data, noting that the wearables market as a whole grew only 3% in the third quarter. That’s a massive deceleration compared to the 67% and 26% growth rates recorded in the first and second quarters, respectively. She also noted that Fitbit outpaced the rest of the market, but reminded investors that management commentary on the third quarter earnings call indicates that some of the growth was “related to demand pull forward.”

She said it’s possible that demand for fitness wearables may recover, as it could just be pausing because consumers who wanted one probably already bought one and others have not yet become interested enough to buy one. She did call Fitbit’s focus on expansion into healthcare “interesting,” but she believes adoption in that segment will go more slowly.

She doesn’t expect much of an impact from the Pebble acquisition because of its small size and limited momentum, although she does see it as a positive.

Shares of Fitbit stock pulled back by more than 1% right after opening bell on Thursday but then began to recover. As of this writing, the stock is down only 0.25% at $7.95 per share.