Shares closed up 1.7% to $55.36 after touching six year highs earlier Wednesday, when Citigroup analyst Jeremy David issued a buy rating on the stock and set a $65 price target. Shares are now 70% from a 52-week high.
David sees continued gains on the promise of Garmin's new wearable Vivofit fitness bands. Priced at $130 to $170, Vivofits track calories, heart rate, distance and other health-related activities. The fitness band tracking market is competitive, with Fitbit, Jawbone and Fuelband competing for market share and computer chip giant Intel entering the market with the recent purchase of wrist-worn device maker Basis Science. Still, David believes Garmin is positioned to boost market share.
"We believe Garmin can become a top 2 player in the activity monitor market over the next six months,'' David says in a research note, noting a Fitbit recall of the Force fitness monitor creates a near-term opportunity.
"We believe retailers are likely to position Garmin's Vivofit as a substitute to Fitbit's Force," David says.
Garmin peaked at about $123 a share in September 2007 before bottoming below $15 in 2008, as sales of its ubiquitous navigation devices lost out to smart phone apps. Garmin has been making a comeback on stronger earnings and the rollout of new products, including cameras, aviation altimeters, electronic dog collars, fish locators and golf course mappers.
Gains in fitness, outdoor, marine and aviation sales helped offset a 3% decline in 2013 automotive sales, which still accounted for nearly half overall 2013 revenue.
Some stock analysts have been raising their price targets since mid-February, when CEO Cliff Pemble said 2014 results would be buoyed by the diversified products. Earlier this month, the company won a patent infringement case with Paci! ng Technologies.
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