(Reuters) - Garmin Ltd GRMN.O reported better-than-expected quarterly profit and raised its full-year forecast on Wednesday, boosted by higher demand for its activity-tracking wearable devices.
Garmin shares were up 1.5 percent at $63.40 in midday trading. The stock has gained 27 percent in the last 12 months.
Sales in its fitness segment, which caters to athletes, rose 24.3 percent to $225.1 million, while sales in its outdoor segment that sells to campers and travelers rose about 4 percent to $201.6 million.
Garmin, which started as a GPS device maker, has gained in recent years due to a surge in demand for smartwatches and other wearable devices that track everything from heart rates and calories to a pet’s movement.
However, an Apple Watch needs to be connected to an iPhone, while Garmin devices can pair with both Apple and Android phones.
Companies are expected to ship 124.9 million wearable units by the end of 2018, up 8.2 percent from last year, according to research firm International Data Corp.
Switzerland-based Garmin’s latest fenix 5 series of watches targets athletes and retails from $550 - higher than the $329 retail price of the latest Apple Watch.
“We believe the quarter will go a long way toward establishing confidence in Garmin’s fitness business having clear differentiation versus mainstream fitness tracker and mainstream smartwatch competitors,” Longbow Research analyst Joe Wittine wrote in a note.
Garmin has been relying on the growth of its watches and marine cameras to offset declining sales of its traditional automobile navigation devices that has been its mainstay for years.
Sales in its auto segment, Garmin’s biggest unit, plunged 19.3 percent to $180.1 million in the quarter.
The company also raised its full-year proforma profit forecast to $3.30 per share from $3.05 earlier, above analysts’ expectation of $3.13 per share.
Garmin said its second-quarter net income rose to $190.3 million, or $1 per share, from $177 million, or 94 cents per share, a year earlier.
Excluding items, it earned 99 cents per share. Net sales rose 7.6 percent to $894.5 million.
Analysts on average had expected earnings of 87 cents per share on revenue of $845.7 million, according to Thomson Reuters I/B/E/S.
Reporting by Akanksha Rana in Bengaluru; Editing by Supriya Kurane
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