Garmin Ltd. (NYSE: GRMN) has recently been in the spotlight as BofA Securities analyst Ronald Epstein revised the company’s price target from $185 to $175, while maintaining an Underperform rating on the stock. Currently trading at $218.07, Garmin boasts a market capitalization of approximately $42 billion. Despite its strong financial health, InvestingPro analysis suggests that the stock may be overvalued, prompting Epstein’s cautious stance.
In its latest earnings report, Garmin delivered impressive results for the fourth quarter, posting an adjusted earnings per share (EPS) of $2.41, which exceeded consensus estimates by around 22%. This performance aligns with BofA Securities’ projections and highlights the company’s robust gross profit margins of 58.7%. Over the past twelve months, Garmin has achieved a remarkable revenue growth rate of 20.44%. However, the firm has adjusted its 2025 adjusted EPS forecast for Garmin down from $9.15 to $8.55. This new estimate still indicates stronger growth in the Fitness and Outdoors segments compared to the consensus estimate of $7.95.
The revision in Garmin’s price target and earnings forecast is largely influenced by anticipated sales deceleration in the first half of 2025, driven by ongoing macroeconomic uncertainties. BofA Securities anticipates that a slowing consumer cycle will likely limit the addition of new buyers during this period, leading to a more conservative outlook on the company’s growth potential.
Epstein’s updated price objective of $175 is based on a valuation of 1.0 times the price-to-earnings (P/E) ratio relative to the S&P 500, utilizing the firm’s 2026 earnings projections, which remain unchanged. His commentary reflects a cautious view on Garmin’s stock, suggesting that the current market valuation does not fully align with the company’s growth prospects.
Despite these challenges, Garmin recently reported a record-breaking fourth quarter and full-year performance for 2024, with a 23% year-over-year increase in Q4 revenue, reaching $1.82 billion. This growth was primarily driven by strong sales in smart wearables and adventure watches, with both the fitness and outdoor segments experiencing a remarkable 31% increase. The aviation segment also saw a 9% rise in sales, while the auto OEM segment enjoyed a substantial 30% year-over-year growth.
In addition to its financial achievements, Garmin has made significant strides in expanding its market presence. The company announced the selection of its G3000 PRIME integrated flight deck by Pilatus Aircraft Ltd for military training aircraft, marking its entry into this new market. Furthermore, Garmin has partnered with Clippd to integrate golf data from its smartwatches into Clippd’s platform, enhancing game improvement strategies for golfers.
Garmin is also collaborating with prestigious institutions such as Harvard University and the University of Oxford on a study that links sleep and exercise to happiness, utilizing data collected from its smartwatches. Additionally, the company plans to retrofit Airbus H130 helicopters with its GFC 600H Helicopter Flight Control System, which is expected to enhance safety and mission effectiveness.
In a contrasting view, Tigress Financial Partners has raised Garmin’s stock target to $285, maintaining a Strong Buy rating. The firm cites continuous innovation and new product development as key drivers for Garmin’s future growth.
As Garmin navigates a complex market landscape, investors will be closely monitoring the company’s performance and strategic initiatives in the coming months. With a blend of strong financial results and innovative partnerships, Garmin remains a significant player in the tech and wearables market, even as it faces challenges ahead.
