- Morgan Stanley reits their Underweight rating and $85 tgt on Garmin (NASDAQ:GRMN) ahead of results (Aug 2). Firm notes that evidence of Tom Tom product delays in Europe might signal a share shift to Garmin in 2H06. However, recent announcements from Pioneer, Philips and Fujitsu-Siemens confirm their expectation that Garmin will face increased competition in the PND market from established CE companies in 2H06E and that this might put further pressure on PND pricing, market share and margins going into FY07E.
Firm is raising their FY06E US market PND estimate from 1.9 mm to 2.5 mm, and reducing European estimate from 8.3 mm to 8.0 mm, bringing their forecast for global market PND units to ~ 11 mm. They have also increased their assumption for GRMN's PND market share to 23.6%, implying GRMN sells 2.5 mm PNDs in FY06E.
At 24.8x FY06E EPS, they believe the market is pricing in a bullish scenario for PND unit growth and GRMN market share for FY06E. A recent history of stock price underperformance in spite of positive earnings surprises implies that high expectations are likely baked into stock price.
Notablecalls: Morgan Stanley has been dead wrong on GRMN. Would you buy a PND from Pioneer, Philips or Fujitsu-Siemen? Ok, maybe Philips. But not from the other two. I think the fact of Mother Morgan capitulating ahead of results will provide us with one upside day. Yesterday's high should work as a trigger. Also check out the note from Soleil yesterday.
Firm is raising their FY06E US market PND estimate from 1.9 mm to 2.5 mm, and reducing European estimate from 8.3 mm to 8.0 mm, bringing their forecast for global market PND units to ~ 11 mm. They have also increased their assumption for GRMN's PND market share to 23.6%, implying GRMN sells 2.5 mm PNDs in FY06E.
At 24.8x FY06E EPS, they believe the market is pricing in a bullish scenario for PND unit growth and GRMN market share for FY06E. A recent history of stock price underperformance in spite of positive earnings surprises implies that high expectations are likely baked into stock price.
Notablecalls: Morgan Stanley has been dead wrong on GRMN. Would you buy a PND from Pioneer, Philips or Fujitsu-Siemen? Ok, maybe Philips. But not from the other two. I think the fact of Mother Morgan capitulating ahead of results will provide us with one upside day. Yesterday's high should work as a trigger. Also check out the note from Soleil yesterday.
Amtech killed the idea coming out with a Sell rating and $75 tgt.
ReplyDeleteBold call by GRMN makes mkt participants nervous. Stock broke the kay $92 level which is NOT a good sign for the bulls.