Garmin Ltd. (GRMN) shares rose more than 5% during Wednesday's session after the company posted better-than-expected financial results. Revenue rose 6.8% to $954.8 million, beating consensus estimates by $23.9 million, and non-GAAP net income came in at $1.16 per share, beating consensus estimates by 15 cents per share. The company also boosted its full-year guidance for revenue ($3.5 billion to $3.6 billion) and earnings per share ($3.70 to $3.90) due to improvements in Aviation, Marine, and Auto.
Analysts had been lukewarm on Garmin stock ahead of its second quarter financial results. In June, JPMorgan analyst Paul Chung upgraded the stock from Underweight to Neutral but lowered his price target from $77 to $75. After Garmin stock fell around 12% from its 52-week highs, the analyst cited the stock's balanced risk/reward profile for the move, adding that it's a "relatively safer play" given the company's diversified product lineup.
From a technical standpoint, the stock broke out from trendline resistance but remains below its 52-week highs made in mid-April. The relative strength index (RSI) moved to neutral levels with a reading of 55.20, while the moving average covergence divergence (MACD) continues to trend sideways. These technical indicators provide few hints about where the price may be headed over the coming sessions and suggest that there's a lot of indecision that remains in the market.
Traders should watch for some consolidation above trendline support over the coming sessions before the stock potentially moves higher to retest its 52-week high. If the stock breaks down, traders could see a move to retest trendline support at around $76.00. A further breakdown from those levels could lead to the 200-day moving average at $74.10, but that scenario seems unlikely to occur given the bullish earnings.
The author holds no position in the stock(s) mentioned except through passively managed index funds.