Oppenheimer Downgrades Garmin Amid Concerns For Growth Opportunities

In a report issued on Monday, Oppenheimer downgraded Garmin Ltd. (NASDAQ: GRMN) to Market Perform due to slower growth, perception of wearable competitive threats, and an underappreciation of aviation/marine products.

Andrew Uerkwitz and Martin Tang wrote, "Garmin normally should be a core technology holding due to its well respected branding, ability to adapt to changing industry trends, and large cash holding with consistent capital return to shareholders. However, we are downgrading to Perform as we see limited near-term catalysts and expected negative investor sentiment due to foreign exchange issues in the near term and tougher competition in the general wearables market."

While Garmin's two segments -- Aviation and Marine -- are stable cash generators, the Apple Watch, if proven to be functional as well as stylish, can hurt Garmin's margins on their line of watches. The company currently has $2.8 billion in cash, which will allow Garmin to return money to shareholders and provide opportunities to enter new growth areas through acquisitions. However, it will be a challenge for the company to find that opportunity.

Shares of Garmin recently traded at $48.49, up 1 percent.