Shares in Garmin fell more than 4 percent on Monday as Oppenheimer & Co. pointed to falling demand for its technology due to global economic weakness.
THE SPARK: Analyst Yair Reiner said Garmin, which makes global positioning systems, has gained market share in the U.S. and Europe. But Europe's economic problems as well as troubles elsewhere in the world are weighing on the autos sector. Garmin's devices for the automobile industry are a huge part of its business.
THE ANALYSIS: Aside from the automotive industry, Reiner says demand is also weakening in the marine and aviation segments. On the upside, Garmin is building up business in its outdoor and fitness categories as demand for its new golf, hiking and dog training products grows.
However, Reiner is concerned about an increase in competition from companies like Apple Inc. The explosive growth of smartphones has alrady cut into Garmin's potential market. On June 29, the day Apple introduced its first iPhone, shares of Garmin were going for about $74 each, about 84 percent more than the cost of a share today.
On Monday, Apple is holding its Worldwide Developers Conference in San Francisco and some expect CEO Tim Cook to reveal Apple's own foray into the mapping arena. The phones now use Google mapping technology.
Reiner, however, reaffirmed a "Perform" rating.
SHARE ACTION: Shares of Garmin Ltd., based in Schaffenhausen, Switzerland, slipped $1.73 to $40.04 in afternoon trading. Over the past year, the stock has traded in a range of $29.23 to $50.67.