Shares of navigation-device maker Garmin fall after joining Goldman’s ‘Conviction Sell’ list

Garmin shares fall after downbeat Goldman note

NEW YORK — Shares of Garmin Ltd. fell Wednesday, after Goldman Sachs predicted weakness in the market for personal navigation devices.

Garmin faces rising competition from more sophisticated cell phones that can mimic the Global Positioning System technology the company markets.

Goldman analyst Thomas Lee said slowing demand could translate into worse-than-expected results for the Cayman Islands-based company in the fourth quarter and next year. In a note to investors, he added the stock — already rated “Sell” — to his Americas Conviction Sell List.

Along with fresh competition, Garmin risks cannibalizing its personal navigation business with its own line of smart phones, Lee said.

He added that the “market is overestimating the sustainability of the company’s strong” second-quarter margins.

Last week, Garmin topped Wall Street forecasts, notching adjusted earnings of 83 cents per share for the second quarter. That came in well above the average forecast from analysts, who predicted 51 cents, according to Thomson Reuters. Sales tumbled 27 percent to $669.1 million, but beat the average projection of $657.1 million.

Garmin shares fell $1.30, or 4 percent, to $31.15 in afternoon trading.