Tuesday, January 6, 2009

Goldman Sachs "conviction" sell of Garmin

Did anyone see the call by Goldman Sachs today regarding Garmin? Maybe if Goldman Sachs had a GPS device helping them navigate the financials markets, they would do better than not having a clue!

Remember on June 23, when Goldman Sachs put US Steel on their conviction buy list and raised their target on this number from $210 to $228? The stock promptly fell to 30 in six months. The point is, even analysts with "conviction" can't see past the end of their nose when we are at a turning point in the price of the stock or in the markets.

Now that Garmin is now 100 points off of it's highs, Goldman sees something that they don't like, so they downgraded it to conviction sell. Does anybody really care?

The institutions have dumped this stock, and then dumped it some more. The only buyers seem to be Garmin with their stock buyback program. But who is left to sell?

It didn't look like anyone really cared about Goldman's sell recommendation, except perhaps those who needed to cover their shorts. Garmin has no debt, $800 million in cash and marketable securities, and a market cap of $4 billion, and now we have a conviction sell?

Who cares? It's just stupid downgrading the stock down here. The whole world already knows that business has been poor in the PND field, but Garmin has been outperforming its rivals.

And speaking of rivals, has anyone looked at TomTom's financial position lately? Does it really hurt having a wounded duck for a competitor in the long run? Especially after they shelled out over $4.3 billion for Tele Atlas six months ago?

Those who are interested in Garmin, for the long haul, should be ignoring Goldman's advice and taking down the stock. Check out the chart, and then check out Goldman's advice, and make your own decision.

But don't rely on Goldman Sachs for your conviction!


Anonymous said...

The shorts got burned on earnings beat. If this desperation call doesn't smell fishy, nothing does. If the Nuvi-phone even scratches at market share Garmin will go through the roof. Maybe they just want some cheaper shares while they can still get some.

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