Analyst Ronald Epstein of Bank of America Securities reiterated a Hold rating on Garmin (GRMN – Research Report), with a price target of $120.00.
Geoff Meacham has given his Hold rating due to a combination of factors, several of which are highlighted in the report. Garmin (GRMN) has seen a strong demand for its wearable devices in the Fitness and Outdoor segments, with the former growing by 26% year-over-year (Y/Y). The strong 3Q results are expected to continue into 4Q as the company noted that retail inventories are adequate, with leaner stocks being replenished ahead of the holidays. GRMN’s CEO, Cliff Pemble, was cited as stating that retailers are positive about 4Q, which is usually the best for wearables as they benefit the most during the holiday season.
Meacham also takes into account the strong 3Q23 revenue in the Auto OEM segment, which was up by 59% Y/Y mainly due to higher domain controller shipments, especially on the BMW line. GRMN has maintained its target of achieving profitability in the Auto OEM segment by 2024. However, Meacham remains cautious due to the significant cost reduction work needed for operating margin inflection, despite the higher volumes. Additionally, product mix across the segments has been identified as the largest margin variable for GRMN. Despite the strong demand and expected profitability, there are concerns about margin pressures in Marine, which have slightly offset the positives hence the Hold rating.
Epstein covers the Industrials sector, focusing on stocks such as Boeing, Aercap Holdings, and Spirit AeroSystems. According to TipRanks, Epstein has an average return of 4.6% and a 56.45% success rate on recommended stocks.
In another report released on November 2, Morgan Stanley also maintained a Hold rating on the stock with a $100.00 price target.
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Garmin (GRMN) Company Description:
Switzerland-based Garmin Ltd. designs, develops, manufactures, markets, and distributes a range of navigation, communication, and information devices worldwide. It operates through five segments: Auto, Aviation, Marine, Outdoor, and Fitness.
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