Navigation and communication equipment manufacturer Garmin (GRMN) is poised to witness further upside thanks to its sustained focus on bringing innovative GPS-based products to the market.
The steady introduction of new products keeps improving, thus keeping Garmin’s portfolio competitive.
Additionally, Garmin’s strong balance sheet and ample liquidity allow it to pursue growth-driving investments and acquisitions, along with improving shareholder returns through dividend raises.
Wednesday, Tigress Financial Partners analyst Ivan Feinseth reiterated a Buy rating on the stock and raised his price target to $202 from $198. He believes that “ongoing innovation, the continuing strong cadence of new product introductions, and ongoing market expansion will continue to drive significant growth opportunities”.
He also put together a few takeaways from his analysis of the company. (See Analysts’ Top Stocks on TipRanks)
Fitness Segment in Good Health
The company’s Fitness business, which brought in 28.7% of revenues in the third quarter of this year, continues to be driven by its focus on manufacturing location-enabled wearables. In October, Garmin opened its fourth manufacturing unit in Taiwan, doubling its capacity to manufacture smart wearables and fitness devices, which is a further positive.
Growing engagement on the Connect IQ App store is another upside. The Connect IQ App store contains numerous health and fitness applications, watch faces, and widgets.
Upsides in Aviation Bode Well
Garmin’s efforts to improve aviation safety and performance via its technological innovations are resulting in growing revenues from its Aviation segment. This segment grew 19% year-over-year in Q3, fueled by growth in OEM (original equipment manufacturing) and aftermarket product categories.
Driven by its continued efforts, the company was also recently placed at the top of the rung in avionics product support by Aviation International News for the 18th year straight.
Wall Street’s Take
The Wall Street analyst consensus, on the other hand, has a cautious but optimistic stance on Garmin, with a Moderate Buy rating based on two Buys and three Holds. The average Garmin price target of $165.20 indicates an upside potential of 15.4%.
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Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.
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