On Tuesday, Piper Sandler changed its stance on Trimble Navigation (NASDAQ:TRMB), moving its rating from Neutral to Overweight. Accompanying this upgrade, the firm has also increased the price target for Trimble's shares to $68.00, rising significantly from the previous target of $51.00.
The upgrade follows Trimble's recent fourth-quarter earnings report, which exceeded expectations with total revenue surpassing Wall Street predictions by 2% and earnings per share (EPS) by 5%. Despite fiscal year 2024 revenue guidance falling short of Piper Sandler's estimates, the discrepancy was attributed to the anticipated timing of the Precision Agriculture (Ag) divestiture and a lower agricultural run-rate in the first quarter due to the partnership transition.
Piper Sandler noted that, excluding the Precision Ag segment and the impact of a 53rd week, their revenue estimate for fiscal year 2024 was $3.43 billion, which is slightly below the company's guidance midpoint of $3.46 billion. The firm highlighted several factors contributing to the upgrade, including the potential for a software-centric growth narrative where recurring revenue could increase to over 55% of the mix, with organic growth in the double digits and the capability to deliver mid-teen earnings before interest and taxes (EBIT) growth.
The firm also pointed to several upcoming catalysts that could positively impact Trimble's stock performance, including the disclosure of resegmentation, the repayment of $1.1 billion in debt, the possibility of up to $800 million in share repurchases throughout 2024, and an analyst day in the second half of the year where updated targets will be presented. These elements have contributed to Piper Sandler's optimistic outlook on Trimble's stock, leading to the upgraded rating and increased price target.
InvestingPro Insights
Piper Sandler's recent upgrade of Trimble Navigation (NASDAQ:TRMB) to Overweight with an increased price target reflects a strong confidence in the company's growth prospects. Supporting this outlook, InvestingPro data reveals that Trimble is currently trading near its 52-week high, with a price 96.9% of that peak. This indicates a robust market sentiment and aligns with Piper Sandler's positive stance.
Trimble has demonstrated a strong return over the last three months, boasting a 33.98% price total return, which may signal a solid momentum in its stock performance. Such a trend could be a precursor to further gains, lending credence to the Overweight rating.
In terms of valuation, Trimble's Price/Earnings (P/E) ratio stands at 42.01, which is above the industry average, suggesting that the market may be pricing in the future growth anticipated by analysts. The company's profitability over the last twelve months and predictions of continued profitability this year, as highlighted by the two InvestingPro Tips, further cement the company's financial stability.
For readers looking to delve deeper into Trimble's financial health and stock potential, InvestingPro offers additional insights. There are 8 more InvestingPro Tips available for Trimble, which can provide a more comprehensive understanding of the company's stock performance and valuation metrics. To access these tips and gain a more informed investment perspective, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.