Garmin Earnings: Strong First Quarter Doesn’t Alter Our Long-Term View

We maintain our $132 fair value estimate for shares of narrow-moat Garmin after the firm reported good first-quarter results that were in line with our long-term thesis. Garmin’s results exceeded our expectations, but management maintained its full-year guidance, which implies a more moderate progression from this strong quarter. Garmin’s profitability was especially good in the quarter, but we now expect levels to remain consistently around this level through the rest of the year. Shares popped more than 10% after the release, which we see as a short-term reaction to a good quarter despite the company maintaining its full-year outlook. We now see shares as overvalued.