Garmin Is Facing Market Share 'Concerns,' Warns D.A. Davidson

• In a recent report D.A. Davison analyst JB Groh reiterated a Neutral rating on shares of Garmin Ltd. GRMN.
• The firm lowered its 12-18 month price target on market volatility and concerns about market share.
• Shares of Garmin are down more than 32 percent year-to-date, and 0.5 percent on Monday trading.

According to the research note, Garmin’s Auto/Mobile segment saw sales decline by roughly 15 percent last quarter (in line with management’s guidance, which called for a 10 to 15 percent decline), mainly on the back of a continued deterioration of the PND market.

Moreover, the firm notes, a substantially strong US dollar poses a headwind for the company when compared with overseas competitors.

Furthermore, Groh adds, a very competitive fitness market will continue to impact negatively on margins. "It is uncertain if Garmin’s investments in advertising and promotional pricing deals will result in significantly higher market share when compared to the current leaders,” he supplements.

Consequently, D.A. Davison trimmed its 12-18 month price target from $48.00 to $40.00. The report highlights, nonetheless, that a high dividend yield (now above 5.5 percent) “should help cushion the decline in the share price.”

Finally, the firm establishes a five-year price target of $55.00, and advises investors to remain on the sidelines “as the company’s largest market continues to decline and its largest growth market opportunity becomes overcrowded.”