Garmin: Goldman Downgrades To Sell; Stock Tumbles

Goldman Sachs analyst Thomas Lee this morning reduced his rating on Garmin (GRMN) to Sell from Neutral, cutting his target price to $15, from $21. The stock was added to Goldman’s “Americas Conviction Sell List.” Lee contends 2009 will be the start of a “multi-year secular decline in Garmin’s core-end market,” personal navigation devices. A key issue: the increased availability of GPS functionality in mobile phones. “We believe the current economic slowdown plus increased smartphone GPS usage and limited diversification options will drive material rev/EPS decline over the next several years,” he writes. “While the shares look attractively valued, we believe trough multiples are likely to see lower levels given the structural changes.” Lee cut his 2008 EPS estimate to $3.24, from $3.39; for 2009, he goes to $2.07, from $2.45; for 2010, he now sees $1.74, down from $2.33. GRMN today is down $1.41, or 6.4%, to $20.59.  ... (link)