Analyst Note| Julie Bhusal Sharma |
Garmin delivered strong second-quarter results amid the COVID-19 pandemic, as revenue and earnings per share surpassed CapIQ consensus estimates. Management highlighted accelerated growth in the fitness and marine segments, which offset weakness in outdoor, aviation, and auto. We are encouraged by Garmin’s resilience in the indoor and outdoor fitness categories, yet we think the macroeconomic uncertainty will have a longer-lasting harmful impact on auto and aviation. Therefore, we are maintaining our $81 fair value estimate. With shares trading around $96, we do not see an appropriate margin of safety and would recommend waiting for a pullback before investing in the narrow-moat name.