Morgan Stanley has revised its stance on Garmin Ltd. (NYSE: GRMN), upgrading the stock to Equalweight from Underweight and increasing its price target to $252 from $195. The change reflects a reassessment of Garmin's near-term growth profile and margin trajectory, according to the firm's published view.
Analyst Erik Woodring cited a brighter-than-expected growth outlook for 2026 and lower margin pressure than previously modeled as the primary drivers behind the rating change. Woodring also noted that Garmin's valuation compared with the S&P 500 and its forecasted earnings growth rate still presents an attractive combination under the firm's updated assumptions.
Morgan Stanley's earlier underweight thesis had rested on the expectation that Garmin's premium valuation multiple would compress as revenue and earnings growth moderated after a particularly strong 2024. The firm said that thesis has played out with mixed success over the past 18 months, prompting a recalibration of expectations.
Under the revised framework, the $252 price target corresponds to 24 times Morgan Stanley's calendar year 2027 earnings per share estimate of $10.49. The firm notes that Garmin's current valuation sits at 23 times its new 2027 EPS estimate, which is slightly above the company's trailing five-year average multiple of 22 times.
To outline a range of scenarios, Morgan Stanley provided a bear case valuation of $148 and a bull case valuation of $332. The firm expects Garmin's earnings per share to compound at more than 7% through calendar year 2028 under its central forecast.
Recent operating results provide context for the revised outlook. Garmin reported fourth-quarter 2025 results that surpassed consensus expectations on both the top and bottom lines. The company reported earnings per share of $2.79, versus an expected $2.40, representing a 16.25% upside to estimates. Revenue for the quarter came in at $2.125 billion compared with an anticipated $2.02 billion, a 4.95% beat.
Those results have been favorably received by market participants, and the strong quarter is highlighted by Morgan Stanley as consistent with the updated view on 2026 and beyond. While specific analyst-level follow-on actions were not detailed in the firm's commentary, the combination of the upgrade and the quarterly beat points to improved sentiment among some investors and analysts.
This revised rating and target reflect Morgan Stanley's reassessment of growth and margin assumptions rather than any change in reported historical figures. The firm has explicitly preserved a range of outcomes, reflected in its bear and bull valuations, and continues to compare Garmin's multiple to its own estimates and the broader market.
Investors evaluating Garmin will be watching whether the company's revenue and earnings trajectory in 2026 validates Morgan Stanley's updated assumptions and supports the firm's central scenario of better-than-7% EPS compound growth through calendar year 2028.