Barclays Issues Co Note After Meeting With Garmin Management (GRMN,WMT)

garmin12/9/2009-Barclays Capital equity research issued a note to clients Wednesday following a meeting with Garmin's (NASDAQ:GRMN) management.

Barclays analyst Amir Rozwadowski said that management provided a comprehensive overview of its outlook across a key number of its businesses including auto/mobile, marine, outdoor/fitness and aviation.

Garmin management indicated that Black Friday PND sales were inline to ahead of its expectations.

Management also confirmed that the company hadn't "chased ASPs to the low end in order to preserve gross margins," therefore the company may have lost some North America market share during the quarter.

That being said, the company had anticipated limited market share loss thus, according to Barclays, units are likely at least in line to potentially above its previous guidance of 40%-50% sequential growth.

Barclays said, "Channel inventories remain at stable levels for Garmin, as the company has seen some re-ordering during December. However, the company did note that WalMart (NYSE:WMT), who has shifted its focus to competitor TomTom during the holiday season, may have more than expected inventory levels."

Regarding margin outlook, Garmin expects continued margin pressure, "potentially in the 40-42% and 20-22% for gross and operating margins respectively."

Barclays concluded with this statement, "Coupled with expectations of growth in its other business lines driven largely by new product introductions, share gains, and a broader cyclical recovery, management is planning for growth on a top and bottom line basis (compared to consensus expectations of a decline)."

Barclays added that while smartphone pressures may cause a threat to the company's long-term outlook, short-term they would caution on being short the stock as it most likely hasn't had much of an effect as of yet.