GPS Giant Garmin Keeps Driving by Jay Palmer
Summary: GPS giant Garmin's (NASDAQ:GRMN) shares ($80) have rallied more than 150% since last February. Escalating car-GPS sales in the U.S. and Europe boosted revenue 73% to $1.77 billion in 2006, while EPS climbed a robust 64% to $2.35. Analysts expect EPS of $2.89/share in 2007, and $3.28 in 2008. Dougherty & Co. analyst Jeff Evanson notes that marine and aviation markets have yet-to-be tapped by GPS devices. He says Dutch rival TomTom is struggling to find footing in the U.S., where Garmin controls 50% of the market. He also notes that Garmin just recently began selling units through Wal-Mart (NYSE:WMT). Bearish analysts like Bank of America's Ron Tadross say share prices already reflect the company's growth prospects. He cedes that sales of portable navigation devices will continue to grow at a 110% annual clip, but worries about market share being usurped by other GPS players, and pre-installed car systems. Barron's is unimpressed by the opposition: Sony (NYSE:SNE) introduced an unimpressive unit last year, while Garmin continues to roll out cheaper mass-market units, and still caters the demand for innovation at the high-end. Despite record demand, the percentage of drivers who own GPS systems remains low. Evanson says shares could hit $93 over the coming year.