JPMorgan Upgrades Garmin On Valuation, 'Limited Downside'

In a report published Thursday, analysts at JP Morgan upgraded

from Underweight to Neutral. The price target has been lowered from $48 to $46. The stock has declined about 20 percent since the company reported its 4Q results and issued a weak guidance for FY2015, and currently has limited downside. "We are upgrading Garmin from our long-standing Underweight to Neutral based on valuation, the firm's strong balance sheet, decent cash flow generation, attractive dividend yield, and commitment to buybacks," JP Morgan explained. Garmin has also reported lower than expected 1Q15 results, with the revenue and EPS coming in below the estimates and the consensus. While revenues came in flat, year on year, gross margins were robust, despite the Fx headwinds. "Fitness came in lighter than expected as new product releases began shipping in 2Q. That said, Fitness comps get tough in 2Q as we lap the launch of the flagship vivofit activity tracker," the analysts said. JP Morgan expects Garmin's stock to perform in line with the mean of their coverage universe for the coming six to 12 months. Risks related to the below expectations top-line growth is likely to be already priced into the stock.