Garmin Shares Tumble 6% on Pacific Crest Downgrade On Apple and Wearables Concerns

Shares of

fall more than 6.33 percent following Pacific Crest's downgrade. Analyst Brad Erickson downgraded shares of Garmin from Sector Perform to Underperform and listed a fair value range in the mid- $40.00's. The firm emphasized that Apple's

new iPhone and iWatch announcements could drive headwinds. Erickson expects the iPhone's larger screen to put pressure on PNDs and the iWatch to "carry both headline and competitive risks." Pacific Crest wrote, "the presence of a larger-screen iPhone during Q4 could have an immediate impact on Garmin's PND segment, which is 43% of the company's revenue and roughly one-quarter of operating profit." Despite solid vivofit demand, the analyst added that elevated inventory could weigh on company financials. Pacific Crest remarked that the street is overly optimistic on fitness trackers segment, as wearable trends appear "unfavorable". The analyst concluded that he has "concerns about the underlying strength of the outdoor and fitness businesses which contribute over half of the company's operating profit and are critical, in our view, if the company is to grow earnings meaningfully." Shares of Garmin closed at $60.63 on Tuesday. The stock fell to $59.00 in Wednesday's premarket before opening at $59.72. Shares saw a sharp descent in the morning falling as much as $56.79, down 6.33 percent.