Tigress raises Garmin stock target to $285, maintains Strong Buy

On Wednesday, Tigress Financial Partners increased their price target on Garmin Ltd . (NYSE: NYSE:GRMN) to $285 while reiterating a Strong Buy rating on the stock. The firm’s analysts highlighted Garmin’s continuous innovation and new product development as key drivers for the upgraded target. According to InvestingPro data, Garmin has demonstrated impressive momentum with a 70% return over the past year, supported by strong financial health metrics that earned the company a "GREAT" overall rating. They emphasized that the introduction of new halo product categories is expected to open new markets and continue to propel revenue and cash flow growth, enhancing shareholder value.

Garmin celebrated its 35th anniversary with a record-breaking fourth quarter and full-year 2024 results. The company reported a 23% year-over-year increase in Q4 2024 revenue, reaching a record $1.82 billion, which was attributed to strong performance in smart wearables and adventure watches. InvestingPro analysis reveals the company’s robust financial position, with revenue growth of 20.44% and an impressive gross profit margin of 58.7% in the last twelve months. Fitness sales saw a significant rise of 31% year-over-year to $539.31 million, while outdoor sales also surged by 31% to $629.37 million, primarily due to the popularity of adventure watches.

The aviation segment of Garmin’s business reported a 9% increase in sales to $236.88 million, and marine sales went up by 5% to $251.16 million. Notably, the auto OEM segment experienced a substantial 30% year-over-year growth, with sales amounting to $165.75 million. For the full year of 2024, Garmin’s revenue climbed by 20% to a record $6.30 billion, with all segments posting record annual revenues.

Garmin’s gross margin for Q4 and the full year 2024 expanded by 100 basis points to 59%, which the analysts attributed to the company’s fully integrated manufacturing capabilities and efficient operations. The firm has maintained a robust pace of new product launches and expects to continue this momentum into 2025, including the introduction of new product categories.

Since its inception, Garmin has shipped over 300 million units, with more than 18 million delivered in 2024 alone. The company’s extensive and feature-rich product portfolio has been instrumental in driving revenue growth and market share gains. Continuous updates and new applications are advancing Garmin’s growing ecosystem of users. The analysts also pointed out that Garmin’s vertically integrated manufacturing model is a crucial part of its innovative capability and competitive advantage.

Garmin’s strong demand for innovative products is further supported by the resilience and higher average incomes of its customer base, who value the advanced functionality and quality of Garmin’s offerings. The company’s solid balance sheet and cash flow are expected to fuel ongoing investments in new product development, leading to a higher Return on Capital, gains in Economic Profit, and increased shareholder value creation. InvestingPro data shows that Garmin holds more cash than debt and maintains a healthy current ratio of 3.54, indicating strong financial flexibility. For deeper insights into Garmin’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Additionally, Garmin is focused on enhancing shareholder returns through dividend increases and share repurchases. The company has proposed a 20% increase to its quarterly dividend to its board. Tigress Financial Partners’ analysts concluded that their 12-month target price of $285, combined with dividends, represents a potential total return of over 28% from current levels.

In other recent news, Garmin Ltd reported strong financial results for the fourth quarter of 2024, with earnings per share (EPS) reaching $2.41, significantly surpassing analysts’ expectations of $1.91. The company’s revenue for the same period was $1.82 billion, exceeding the predicted $1.65 billion. This performance was marked by record revenue across all five business segments, demonstrating a 23% increase year-over-year. Garmin has projected an 8% revenue growth for 2025, with a target of $6.8 billion, and announced a proposed 20% increase in its annual dividend to $3.60 per share.

The company experienced growth in key areas such as fitness, auto OEM, and outdoor categories, supported by strong demand in the EMEA region and strategic product launches. Garmin’s gross margin for the fourth quarter was 59.3%, while the operating margin stood at 28.3%. Despite challenges in the auto OEM market, particularly in China, and potential tariff impacts, Garmin remains optimistic about its growth trajectory. Analysts from firms like JPMorgan and Cleveland Research have noted the company’s strong market performance and strategic positioning, though they also highlighted potential risks such as increased R&D expenses and macroeconomic uncertainties.

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