Citi Reiterates Buy on Garmin Optimistic on Wearables

In a report published Tuesday, Citi Research analyst Jeremy David reiterated a Buy rating and $65.00 price target on

, optimistic on the growth of wearables. David met with Garmin's management on Thursday at the company's headquarters. When meeting with CEO Cliff Pemble, the CEO reported that Fitness is the next “big business”. Although Fitness accounted for only 14 percent of sales in 2013, Citi forecasts 42 percent year-over-year revenue growth in 2014 and 23 percent growth in 2015, led by the vivofit activity monitor. In the meeting, management added that they need to improve the video quality of the VIRB action camera. David remarked, “Garmin is committed to the category, but shied away from giving a timeline for the next-gen camera as we believe the VIRB re-design is a challenging undertaking. Outdoor wearables (trekking watches and the Approach S4 Golf GPS watch, which offers smart watch-like notifications) are growing nicely.” Following Thursday's meeting, Citi expects “significant upside” to its 15 percent revenue growth and little downside risk to PNDs. The analyst expects Garmin to raise 2014 guidance on the second quarter conference call. Shares of Garmin closed at $57.39 on Friday. On Tuesday, the stock traded as high as $58.15, up 1.32 percent.