Shares of Fitbit (FIT) are sliding ahead of its quarterly report, which is due out after the market close tomorrow. Pacific Crest analyst Brad Erickson expects a first quarter beat but voiced concerns over the company's long-term outlook as growth appears to be decelerating.

LONG-TERM CONCERNS: Pacific Crest's Erickson sees Fitbit's valuation as "compelling" and expects a "beat and raise" first quarter report, as his checks indicate "relatively healthy" demand for the company's Blaze and Alta continues. Fitbit has stocked the channel full with its Charge HRs ahead of Mother's Day, the analyst added. However, Erickson remains more cautious on a longer-term view, given the relatively poor underlying user trends in the category, a lack of sensor differentiation opportunities and rapidly decelerating growth in the U.S., which can be an early indicator of market saturation. The analyst reiterated a Sector Weight rating on the shares, noting that he has yet to hear a compelling bull thesis beyond simply strong near-term demand trends.

WHAT'S NOTABLE: Fitbit is expected to report first quarter earnings after the close on Wednesday, May 4, with a conference call scheduled for 5:00 pm ET.

OTHERS TO WATCH: Other publicly traded companies that make smart watches and wearable fitness tracking products include Apple (AAPL), Garmin (GRMN), Microsoft (MSFT) and Sony (SNE).

PRICE ACTION: In morning trading, Fitbit's stock has dropped more than 6.5% to $17.16 per share.