Sales to the portable navigation device end market currently makes up roughly 25% of Navteq's revenues, so they now expect Navteq's total revenue growth to average 24% over the 2007-2009 timeframe from 17% prior. BAC's target goes to $56 from $45. Reiterates Buy.
Portable navigation market really is taking off in the U.S. Two percent penetration of portable navigation devices and declining prices should keep elasticity at these high levels for at least another 2-3 years. So they are raising their estimates for 2007, 2008 and 2009 portable navigation end market unit growth to 200%, 120% and 50% y/y from 160%, 100% and 40% prior. Firm notes they could still be conservative as they are assuming elasticity to decline 2 points over the next 2 years and are discounting no growth coming from countries outside North America and Europe.
Notablecalls: Looks like BAC's FY08 estimate is the new Street high by far. The previous Street high stood at around $1.80. This type of conviction will not go unnoticed. The logic behind the call looks solid and one can even consider it somewhat conservative, making it even more believable.
I think the call ranks just a few points below the likes of Deutsche's Illumina (NASDAQ:ILMN) call from June 11. But it's surely actionable. Sitting at my old desk, I would load up on NVT on open and watch it climb over the next couple of weeks as other firms join BAC and up their estimates.
NAVTEQ is one of two global suppliers of digital maps for navigation device manufacturers, like Garmin. The company's primary competitor is Teleatlas.
NVT 1-yr chart: