After an “exceptional” 32% YTD run in the stock price, BofA Securities thinks it’s time to “cool off” towards Garmin (NYSE:GRMN) and has downgraded its rating on the stock to Underperform from Neutral and lowered its price target to $150, a 10% downside to Tuesday’s closing price.
Shares are down 5.4% tied to the downgrade.
At its current levels, Garmin (GRMN), which develops and manufactures wireless devices, is trading at ~25.5x P/E on 2025E, a level BofA Securities’ Ronald Epstein views as an “unsustainable” valuation with potential downside likely in the near-term.
“Garmin is well above comps in Consumer Electronics, Fitness/Apparel, Aerospace, and Autos [and is] now trading more in line with premium tech names like APPL and NVDA, even surpassing luxury retailers like LVMH and Moncler,” Epstein says.
And although Garmin (GRMN) products continue to be an exception to the trend of moderating consumer spending, the valuation begs the question whether Garmin (GRMN) can buck the retail spending slowdown.
The BofA April Consumer Survey indicates that respondents expect to spend less on vehicles, electronics, apparel, and more on groceries over the next 3 months. “We see this as potentially deterring an incremental GRMN buyer,” Epstein said in his research report.
Analysts are mixed on Garmin (GRMN) with SA authors rating the stock as a Buy while Wall Street analysts and SA’s Quant rating giving Garmin (GRMN) a Hold rating.
