Zacks Investment Research downgraded shares of Garmin Ltd (GRMN) from OUTPERFORM to NEUTRAL on January 14, 2014, with a target price of $48.00.
Garmin is an OEM of GPS-based equipment. September quarter earnings exceeded the Zacks Consensus Estimate. The results indicate that Garmin is successfully diversifying its business away from the shrinking PND market although near term pressures may be expected to continue because PNDs still make up a significant portion of its revenues. At the same time, Garmin's market share, brand equity, compelling new products across segments, strategic alliances and financial position remain positives. Though we believe that Garmin has the financial muscle to overcome the fierce competition, pricing pressure and PND cannibalization by smartphones will continue to weigh on the company's financials. We are therefore downgrading Garmin shares from Outperform to Neutral.
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