Garmin (NASDAQ: GRMN) shares have advanced from $95 above $123 since the beginning of October, and the current price stands around $118. The COVID-19 pandemic has positively impacted Garmin products’ sales, and the Bank of America raised its price target from $104 to $120 for Garmin stock.
Fundamental analysis: The COVID-19 pandemic has positively impacted sales of Garmin products
Garmin is an American multinational technology company specializing in GPS technology for automotive, aviation, marine, outdoor, and sports activities. The company also produces activity trackers and smartwatches, which becomes an essential part of its product portfolio.
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Garmin shares remain in a buy zone after the Bank of America raised its price target from $104 to $120 as the COVID-19 pandemic has positively impacted Garmin products’ sales. Garmin reported that net sales of outdoor, fitness, and marine products in Q3 had increased by 30%, 35%, and 54%.
“We have always viewed GRMN as a disruptive niche player with a diversified business model and sound balance sheet (the company has $0 debt). However, the COVID-19 pandemic has positively impacted sales of outdoor, fitness, and marine products at GRMN more than we anticipated”, said analyst Ronald Epstein from Bank of America.
It is important to say that total revenue has increased by 18% Y/Y to $1.1B in Q3 while Q3 GAAP EPS was $1.58 (beats by $0.58). Garmin expects to achieve healthy revenue and earnings growth in Q4, which is historically a strong seasonal period.
The company declared a $0.61/share quarterly dividend, and the ex-dividend day is on December 14. Bank of America raised its 2020 EPS forecast for Garmin from $4.30 to $5.10 and the 2021 EPS forecast from $4.65 to $5.30.
Garmin increased its revenue in 2019 to $3.75B from $3.34 in 2018, and the company expects $4B in revenue for the 2020 year. Technically looking, Garmin shares could reach the $120 price target again this December, but with a $22.7B market capitalization, this stock is expensive, in my opinion.
Technical analysis: Garmin shares are trading near record levels
Garmin shares are trading near record levels, and as long the price is above $100, this stock remains in the bull market.
The critical support levels are $110 and $100, $ 120, $125, and $130 represent the resistance levels. If the price jumps above $120 resistance, it would be a signal to buy Garmin shares, and the next target could be around $125.
On the other side, if the price falls below $100, it would be a firm “sell” signal and maybe a trend reversal sign.
Summary
Garmin shares have advanced after the company reported better than expected Q3 results; total revenue has increased by 18% Y/Y to $1.1B while Q3 GAAP EPS was $1.58. Garmin expects to achieve healthy revenue and earnings growth in Q4, which is historically a strong seasonal period. With a $22.7B market capitalization, this stock is expensive in my opinion, but as long the price is above $100 support, there is no risk of the bear market.
