Garmin (NASDAQ: GRMN) is recently trading up $1.60 to $54.47.
Oppenheimer says: "There is a chance GRMN will elect to only slightly tweak 2008 revenue estimates on its next conference call, which would be a positive."
GRMN July call option implied volatility is at 47, puts are at 54; below its 26-week average of 58 according to Track Data, suggesting decreasing price movement. GRMN puts are more expensive than calls because GRMN is difficult to borrow.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
After hitting a one-year high of $125.68 in October, the stock fell to make its one-year low of $39.75 in April. This morning, GRMN opened at $49.32. So far today the stock has hit a low of $48.17 and a high of $49.33. As of 1:30, GRMN is trading at $48.68, down 1.34 (-2.68%). The chart for GRMN looks neutral but improving while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating
For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $70 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in five months as long as GRMN is below $70 at October expiration. Garmin would have to rise by more than 34% before we would start to lose money. Learn more about this type of trade here.
GRMN hasn't been above $70 since January and has shown resistance around $55 recently. This trade could be risky if the company's earnings (due out in late July or early August) are a positive surprise, but even if that happens, this position could be protected by resistance GRMN might find around $62 where it formed a top back in March. Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in GRMN.
While researching GPS maker Garmin Ltd (NASDAQ: GRMN) -- whose stock has lost two-thirds of its value in the last six months -- I can't help but pity those long-term shareholders who reject trend following and technical analysis in favor of investing for the long term. To them, it seemed like only yesterday that GPS was one of the hottest technologies around and this industry leader could do no wrong.
Well, that's usually the time to sell, just as I posted on Apple Inc (NASDAQ: AAPL) in January this year and on Google Inc (NASDAQ: GOOG) in November last year, both before they each dropped 40% in just a few months. Because the truth is these popular technology stocks are all expectations. We're not talking Berkshire Hathaway (NYSE: BRK.A)-type value investing here.
Sure, GPS is still hot, somewhat, but due to intense competition, margins have been evaporating, forcing analysts to lower their earnings estimates. In their latest quarter, Garmin further strengthened the bear case with spiking inventories and accounts receivable. None of that looks to change anytime soon, and even though it's got a P/E of 10, book value is all the way down near $11 per share!
Next week is sure to be filled with fun and volatile market conditions. The highlight will be the Fed decision on key rates, due on Wednesday, April 30, following a two-day meeting. Anytime the Fed has the floor, the markets listen. Tuesday and Wednesday will be filled with speculation up until the time of the announcement of a cut or pause.
There are many possible outcomes for this meeting, as we have seen a substantial change in investor sentiment regarding the potential need for further rate cuts. The buzz on the street is for a cut of 25 basis points and then a wait-and-see attitude from there. I think that is the most likely direction.
There has been a great deal of concern that all the recent rate cuts have not provided the benefit to consumers the economy needs. Clearly, there is a fatty clog within our financial circulatory system. Traditionally, the Fed likes to see how its actions trickle into the economy before it continues too far down one path, which would argue for a pause now. Plus, the Fed does not want to run out of ammunition by cutting rates too far too fast. But there is no question that we are dealing with a more aggressive Fed than we have seen in decades, so I think we will see another small rate cut.
After hitting a one-year high of $125.68 in October, the stock hit a one-year low of $42.01 in April. This morning, GRMN opened at $44.89. So far today the stock has hit a low of $43.72 and a high of $44.90. As of 2:05, GRMN is trading at $43.65, down $1.46 (-3.2%). The chart for GRMN looks bearish and steady, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.
For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $60 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in two months as long as GRMN is below $60 at June expiration. Garmin would have to rise by more than 37% before we would start to lose money. Learn more about this type of trade here.
MOST NOTEWORTHY: Garmin, Thomson Reuters and Heritage-Crystal Clean were today's noteworthy initiations:
Garmin (NASDAQ: GRMN) was initiated with a Neutral rating at JP Morgan. The firm sees risk to 2008 Street estimates given the consumer slowdown in the U.S. and potential ASP and margin pressure as channel inventory is worked down.
Morgan Stanley assumed Thomson Reuters (NASDAQ: TRIN) with an Underweight rating and expects revenue growth in the company's financial business to slow sharply into 2009.
William Blair believes Heritage-Crystal Clean (NASDAQ: HCCI) has the opportunity to gain market share over the next several years as a result of its differentiated parts-cleaning programs, strong sales organization, and experienced management team. Shares were assumed with an Outperform rating.
OTHER INITIATIONS:
Lehman initiated Dell (NASDAQ: DELL) and Sun Microsystems (NASDAQ: JAVA) with Equal Weight ratings and targets of $20 and $17 and Apple (NASDAQ: AAPL), IBM Corp (NYSE: IBM) and Hewlett-Packard (NYSE: HPQ) with Overweight ratings and targets of $195, $144 and $59, respectively.
Pacific Growth started Spectranetics (NASDAQ: SPNC) with a Neutral rating.
Merrill reinstated Chevron (NYSE: CVX), ExxonMobil (NYSE: XOM) and Hess Corp (NYSE: HES) with Buy ratings and price targets of $110, $105 and $125, respectively.
MOST NOTEWORTHY: Diana Shipping, Avanex and Fushi International were today's noteworthy initiations:
Stephens believes Diana Shipping's (NYSE: DSX) current share price represents an attractive entry point for investors. Shares were started with an Overweight rating and $40 target.
Avanex (NASDAQ: AVNX) was initiated with a Buy rating at Merriman. The firm believes the recovery in optical that began in late 2005 is in a relatively early stage and that new product introductions and strong optical trends will drive growth and leverage.
Jefferies assumed coverage of Fushi International (NASDAQ: FSIN) with a Buy rating and $20 target and believes the telecom infrastructure build-out in emerging markets, particularly China, and high copper prices continue to create opportunities for the company.
OTHER INITIATIONS:
Mattel (NYSE: MAT) was assumed at Caris with an Above Average rating and $25 target.
Lehman initiated Garmin (NASDAQ: GRMN) with an Equal Weight rating.
Keefe Bruyette initiated Invesco (NYSE: IVZ) with an Outperform ratin gand $28 target.
MOST NOTEWORTHY: Hershey Foods, Genentech and Garmin were today's noteworthy downgrades:
Bernstein downgraded Hershey Foods (NYSE: HSY) to Market Perform from Outperform, citing commodity cost pressures & slowing volume growth.
Thomas Weisel downgraded Genentech (NYSE: DNA) to Market Weight from Overweight after the company reported Q1 results, due to Avastin growth concerns and a lack of meaningful drivers of long-term revenue growth until 2009.
Oppenheimer cut Garmin (NASDAQ: GRMN) to Perform from Outperform on concerns regarding PND pricing and the company's profitability dynamics.
OTHER DOWNGRADES:
Blackrock (NYSE: BLK) was downgraded at Goldman to Neutral from Buy and to Market Perform from Outperform at Wachovia.
The companies announced plans for the upcoming launch of a new feature that will allow Garmin users to send trip planning results straight from from MapQuest to their Garmin personal navigation device. This will allow users to find a place or to plan and research routes that can then be sent directly to Garmin GPS units with a "Send to GPS" drop down option.
This will also allow users to access previously sent location data from their Garmin devices without needing to input information directly on the device. This new "Send-to-Garmin" feature will be available in April and expands on some existing MapQuest "Send-To" features that already allow consumers to send directions from the MapQuest site to their cell phones.
Garmin Ltd. (NASDAQ: GRMN) stock is falling after GPS chipmaker SiRF Technology Holdings (NASADQ: SIRF) cut its first-quarter revenue forecast due to lower-than-expected demand in a weakened economic environment. This is bad news for GRMN, since it implies lower sales for it as well. GRMN is also under pressure from news that consumer confidence sank to a five-year low in March. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on GRMN.
After hitting a one-year low of $52.18 in April, the stock hit a one-year high of $125.68 in October. This morning, GRMN opened at $59.49. So far today the stock has hit a low of $57.70 and a high of $59.97. As of 12:15, GRMN is trading at $59.78, down $2.60 (-4.2%). The chart for GRMN looks bearish but deteriorating, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.
For a bearish hedged play on this stock, I would consider a May bear-call credit spread above the $75 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in two months as long as GRMN is below $75 at May expiration. Garmin would have to rise by more than 24% before we would start to lose money.
"I've been looking for an opportunity to invest in Garmin International (NASDAQ: GRMN) -- the fast growing global positioning satellite market -- for sometime now," notes wireless industry expert Nikhil Hutheesing.
The editor of The Forbes Wireless Stock Watch says, "Now, with the market rather jittery and competition picking up among GPS companies, Garmin is presenting a good opportunity." Here is his review.
"Garmin has been executing on all fronts and its revenues and earnings have been growing rapidly.While competition is picking up, the outlook for Garmin is good - yet the stock is down about 50% from where it was just a few months ago.
"Garmin International is the dominant player in global positioning satellite technology products. Many of us know Garmin's popular eTrex handheld used by hikers, and automobile systems like its StreetPilot. Garmin has become one of the largest GPS companies in the world, with a 45% market share in the U.S.
"But Garmin aims to be a lot more than just a 'GPS' company. Garmin's management is fully aware that most smart phone makers like Palm and Blackberry are encroaching on its core GPS business. Moreover, nearly every cell phone now has the capability of acting as a GPS navigation system as well.
Garmin Ltd. (NASDAQ: GRMN) stock is falling after JP Morgan cut its 2008 U.S. GDP growth estimate, S&P 500 target and earnings for S&P 500 companies, after the firm's chief economist said he believes a recession began in January. Though GRMN is not a member of the S&P 500, this is a bad sign, as the index is a good indicator for the broader market and lower GDP probably means few people interested in buying Garmin's pricey offerings. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on GRMN.
After hitting a one-year low of $52.11 last March, the stock hit a one-year high of $125.68 in October. This morning, GRMN opened at $54.63. So far today the stock has hit a low of $53.31 and a high of $54.95. As of 12:25, GRMN is trading at $54.03, down $1.11 (-2.0%). The chart for GRMN looks bearish and steady, while S&P gives the stock a very positive 5 STARS (out of 5) strong buy rating.
"Rivals may be creating a buzz in the market for navigational technologies, but Garmin Ltd. (Nasdaq: GRMN) will fight off its rivals as it always has, with product breadth and innovation," says Ian Wyatt in Top Stock Insights.
"Garmin, which first started selling products in 1991, has been on a run. Since 2001, the company has compound annual revenue growth of 30%; net income has grown 29% compounded annually.
"Through sound financial execution, Garmin has become a worldwide leader in providing navigation, communication and information devices, many of which carry global positioning system (GPS) technology.
"The automotive and mobile division, which represents the company's portable navigation devices (PNDs), dominates the company's business. PNDs are the fastest growing, most competitive and most consequential market for Garmin and accounted for 71.2% of revenue in third quarter of fiscal 2007.
"In the North American PND market Garmin's share is more than 50%, and its PND share in Europe is 20%. Itss market share is greater than 60% in aviation and higher than 30% in marine electronics. The company's main geographic market is North America, followed by Europe, and then - to a much smaller extent - Asia.
Garmin (NASDAQ: GRMN) is recently trading up $1.60 to $54.47. 
While researching GPS maker 
Here are some highlights from this past week's 
Next week is sure to be filled with fun and volatile market conditions. The highlight will be the Fed decision on key rates, due on Wednesday, April 30, following a two-day meeting. Anytime the Fed has the floor, the markets listen. Tuesday and Wednesday will be filled with speculation up until the time of the announcement of a cut or pause..gif){kind=logo}
Garmin
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