Garmin Ltd. GRMN bucked the concerns in the wearables market by reporting a solid fourth-quarter results, which topped Street expectations as strength in its higher end, GPS-equipped devices helped offset weaker basic activity tracker sales.
Quarterly Print
Garmin reported consolidated fourth-quarter revenue and adjusted EPS of $860.8 million and $0.73, well above consensus estimates. The company guided to 2017 revenue of $3.02 billion, slightly above consensus of $2.97 billion. Garmin sees full-year adjusted EPS of $2.65, in line with consensus.
Garmin’s strong numbers come as rival Fitbit Inc FIT reported lower-than-expected fourth-quarter results.
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Analyst Commentary
Image Credit: By Solomon203 (Own work) [CC BY 3.0], via Wikimedia Commons“We remain positive on the overall execution and segment positioning, but also continue to view valuation as fair relative to growth. Maintaining our Neutral rating with a new $52 target price,” Baird analyst William Power wrote in a note.
That said, the company does expect a significant deceleration in fitness growth in 2017.
The analyst also raised his price target by $1 to $52, which is based on 15x 2017 EPS plus current net cash of roughly $12 per share.
“A 15x multiple implies close to 20x 2017 EPS including cash, putting it towards the high end of its historical average in the high-teens, reflecting solid execution and strong free cash flow,” Power added.
At last check, shares of Garmin were down 1.16 percent at $53.69. Shares of Fitbit were up 1.79 percent at $5.98.
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