.September 13, 2024 Friday 09:28 AM

Garmin Ltd. (NYSE:GRMN) saw a more than 2% drop in shares pre-market after Barclays downgraded the company to Underweight from Equalweight, setting a price target of $133, down from $181. Concerns over Garmin’s extended valuation led to the downgrade.

Barclays analysts highlighted factors contributing to the downgrade, including Garmin’s premium valuation compared to historical averages, limited visibility into 2025 due to subdued consumer spending on hardware, and a negative shift in revenue mix. They anticipate lower gross margins in the second half of 2024, with a higher proportion of lower-margin Automotive OEM revenue.

Analysts set a 22x P/E ratio on Garmin’s 2024 estimated earnings per share of $6.05, aligning with the company’s historical average, resulting in the $133 price target. This suggests a potential 27% downside from the current share price, with pressure expected from the lower-margin Automotive segment.

Despite the cautious outlook on Garmin, analysts expressed optimism about Logitech (LOGI) in the consumer space, citing conservative guidance and growth potential from upcoming refresh cycles.