Last Update 20 Oct 25

Connect+ Service And Vívoactive 6 Will Expand Global Market Reach

Analysts have raised their price targets for Garmin, with recent updates showing increases ranging from $10 to $20 per share. They cite continued momentum in fitness and wearable segments as key drivers for future growth.

Analyst Commentary

Recent analyst updates reflect a nuanced outlook on Garmin, highlighting both growth drivers and potential headwinds that could impact the company's future performance and valuation.

Bullish Takeaways

Bullish analysts see continued strength in Garmin's fitness and smart wearables segments as a primary catalyst for accelerating revenue growth.
The company's robust execution and innovation track record contribute to its appeal, supporting higher price targets and positive ratings.
Recent earnings outperformance, particularly in fitness, has led to upward revisions in forecasts and improved near-term sales outlooks.
Upside potential is highlighted by at least one analyst estimating total returns of over 25 percent from current share levels if growth trajectories persist.

Bearish Takeaways

Bearish analysts maintain cautious ratings even after raising their price targets. They express concerns that recent momentum in Garmin's core outdoor and fitness businesses may not be sustainable in the latter half of the year.
Despite strong results and higher sales projections, there are worries that earnings guidance implies a weaker performance in the second half.
Macro environment volatility continues to pose risks for demand, which could impact long-term profitability and limit upside for the stock.

What's in the News

Garmin introduced Garmin OnBoard, a wireless Man Overboard (MOB) and engine cutoff system. This product enhances safety for boaters by supporting up to eight tags for adults, children, pets, and objects. (Product-Related Announcement)
Garmin unveiled the rugged eTrex Touch GPS handheld navigator. It offers a high-resolution touchscreen, preloaded TopoActive maps, and up to 130 hours of battery life for outdoor adventurers. (Product-Related Announcement)
The company announced Descent X30, a dive computer made with recycled ocean-bound plastics. The device features a large color display, new dive metrics, and support for multi-gas dive profiles. (Product-Related Announcement)
Garmin launched Bounce 2, a smartwatch for kids with LTE connectivity. Key features include real-time location tracking, two-way calling and messaging, activity tracking, and Amazon Music integration. (Product-Related Announcement)
Garmin announced a collaboration with Meta to provide real-time fitness insights and training alerts to Oakley Meta Vanguard AI glasses. This partnership integrates voice-activated data from Garmin devices. (Client Announcement)

Valuation Changes

Fair Value: Remains unchanged at $218.33 per share. This reflects ongoing alignment between current price projections and company fundamentals.
Discount Rate: Marginally decreased from 7.73 percent to 7.72 percent. This indicates a slight reduction in perceived risk or required return.
Revenue Growth: Maintains a steady outlook at 8.16 percent. There is no adjustment in expected sales expansion rates.
Net Profit Margin: Holds consistent at 21.39 percent. This suggests no change in profitability assumptions.
Future P/E: Edged down slightly from 28.80x to 28.78x. This reflects a minor adjustment in forward earnings multiples.

Garmin's premium services and advanced wearables boost revenue, enhancing margins in both Fitness and service segments due to high demand.
New aviation products, and expanding foreign markets, drive growth across Aviation and international segments, improving revenues and mitigating trade risks.
Rising operational expenses and market challenges in Marine and Outdoor could impact Garmin's revenue growth and compress margins amidst global trade and currency fluctuations.

Catalysts

About Garmin

Designs, develops, manufactures, markets, and distributes a range of wireless devices worldwide.What are the underlying business or industry changes driving this perspective?

The launch of the Garmin Connect+ premium service, which offers AI-based health and fitness insights, is likely to boost subscription-based revenue growth and improve overall margins through higher-margin services.
The new vívoactive 6 smartwatch release, with advanced features like an AMOLED display and enhanced sports apps, suggests potential revenue growth in the Fitness segment, supported by strong demand for advanced wearables.
The introduction of the new PC-12 Pro and PC-7 MKX aircraft, featuring Garmin's G3000 Prime flight deck, indicates solid growth prospects for the Aviation segment, potentially boosting revenue and operating margins through high-value product deliveries.
Strengthening foreign markets, with significant revenue contribution from EMEA (23% growth) and APAC (9% growth), support overall revenue growth and mitigate trade risks, with favorable foreign currency exchange likely improving margins.
Diversified product launches in the Outdoor segment, including the Instinct 3 Adventure watch series, are set to drive future revenue growth, capitalizing on Garmin's strong brand and product innovation in high-demand areas.

Garmin Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Garmin's revenue will grow by 7.9% annually over the next 3 years.
Analysts assume that profit margins will shrink from 23.2% today to 21.5% in 3 years time.
Analysts expect earnings to reach $1.8 billion (and earnings per share of $9.58) by about September 2028, up from $1.6 billion today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 28.2x on those 2028 earnings, down from 29.3x today. This future PE is greater than the current PE for the US Consumer Durables industry at 11.5x.
Analysts expect the number of shares outstanding to grow by 0.24% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.72%, as per the Simply Wall St company report.

Garmin Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The global trade environment's shifting policies, including increased tariffs on products manufactured outside the U.S., could increase costs and affect Garmin's net margins if not offset by currency benefits.
The Marine segment saw a revenue decrease primarily due to promotion timing and continued market softness, which could lead to flat revenue growth and negatively affect earnings.
Economic uncertainty and potential reduced demand for certain products in the Outdoor segment could moderate growth, potentially impacting revenue and net margins.
Operating expenses, including rising R&D and SG&A costs, grew by 10%, which could compress operating margins if revenue growth doesn’t keep pace.
Increased focus on foreign currency fluctuations due to a significant portion of revenue generated in non-U.S. dollar currencies could impact revenue unpredictably if the U.S. dollar strengthens.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $213.833 for Garmin based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $285.0, and the most bearish reporting a price target of just $167.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $8.5 billion, earnings will come to $1.8 billion, and it would be trading on a PE ratio of 28.2x, assuming you use a discount rate of 7.7%.
Given the current share price of $238.5, the analyst price target of $213.83 is 11.5% lower. Despite analysts expecting the underlying buisness to improve, they seem to believe the market's expectations are too high.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Connect+ Service And Vívoactive 6 Will Expand Global Market Reach