Garmin Knows Where It's Headed

Garmin Ltd. (GRMN - Analyst Report) is an OEM [original equipment manufacturer] of GPS-based equipment. December quarter results were short of consensus expectations on both the top and bottom lines. Last year was a difficult one, with net profit dollars declining despite an increase in sales.

Results are expected to weaken further in 2009. Pricing pressures are expected to moderate this year, while unit growth drops off. Although the near-term outlook appears bleak, we remain optimistic about the company's strong financial position, products, brand, market share and management execution.

Consequently, the shares appear cheap. We are reiterating our Buy rating on GRMN shares.

Sejuti Banerjea contributed to this report.