When shares get close to 52-week lows, investors often find themselves forced to take one of two views: the stock has serious problems or it has become a bargain for value investors. So what side are you supposed to take on Garmin Ltd. (NASDAQ: GRMN) after it gets two downgrades close to 52-week lows?

The first downgrade came from Raymond James last Thursday, when the firm lowered Garmin to an Underperform rating from Market Perform. However, a more detailed call was issued Monday, when Oppenheimer lowered its rating to Perform. The firm also abandoned its prior $65 price target.

The firm’s updated conclusion is that Garmin normally should be a core technology holding due to its well-respected brand, ability to adapt to changing industry trends and large cash holding with consistent capital return to shareholders. The downgrade was due to near-term catalysts, expected negative investor sentiment from foreign exchange issues and tougher competition in the wearables market.

Despite seeing some pressure in the near term and taking a fairly neutral stance, Oppenheimer sees the downside of Garmin as well-protected because the company is currently sitting on nearly $2.8 billion in cash and cash equivalents, roughly $14.41 per share. This will allow the company to return capital to shareholders and provide opportunities for future acquisitions, potentially allowing Garmin to pivot again into new growth areas.

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In Oppenheimer’s report, the firm detailed Garmin’s price-to-earnings (P/E) relationship:

Historically, Garmin has traded in the 9-22x range. Due to slower growth, perception of wearable competitive threats, and an underappreciation of Aviation/marine, we believe over the next 9-12 months, the stock will trade below the historical average of 15x. This provides little upside to its current price.

Note that the Aviation and Marine segments are considered the backbone of Garmin and both are stable cash generators with potential compelling opportunities in the medium term.

Other analyst firms have weighed in on Garmin recently as well:

• Atlantic Equities downgraded Garmin to Neutral from Overweight and lowered the price target to $55 from $64 on February 20.
• Merrill Lynch upgraded the rating to Buy from Neutral and raised its price target to $65 from $60 on February 19.
• RBC Capital Markets maintained an Outperform rating and raised its price target to $67 from $62 on February 19.

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So where does Garmin go from here on these mixed views? Sure, the upside is limited but the downside is protected, and with shares near 52-week lows it may not be the time to jump ship just yet. Let’s face it, performing at the market level with a cheaper P/E ratio is not a bad deal after all — but it still has to perform.

Shares of Garmin were up 0.9% to $48.45 in late morning trading Monday. The stock has a consensus analyst price target of $58.25 and a 52-week trading range of $47.31 to $62.05.

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