Zinger Key Points
- Trimble upgraded to Overweight, with a target price raised to $68, amid anticipated share repurchases in 2024.
- Analyst highlights Trimble's strong Q4 performance, debt paydown, and potential for double-digit organic growth, raising FY24 EPS estimate.
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Piper Sandler analyst Clarke Jeffries upgraded Trimble Inc. TRMB to Overweight from Neutral, raising the price target to $68 from $51.
The analyst upgraded the stock with a focus on upcoming catalysts like resegmentation in the first half of the year, debt paydown worth $1.1 billion, up to $800 million of share repurchases in 2024.
Yesterday, Trimble beat fourth-quarter expectations with 9% revenue growth and strong recurring revenue.
While FY24 revenue guidance was below the analyst’s estimate, the primary difference was the timing of the transaction close & a lower Ag run-rate in the first quarter, based on partnership transition, Jeffries added.
On a pro forma basis (excluding Precision Ag from FY23 & FY24), the underlying business is expected to grow ~8% y/y (5.5% organic) with ~27% EBITDA margins, the analyst notes.
Per the analyst, Trimble could at last be in a place where a software-centric bull case could emerge where recurring revenue rises beyond 55% of mix, growing double-digits organically, capable of delivering mid-teens EBIT growth.
The analyst raised FY24 EPS estimate to $2.75 from $2.61.
Price Action: TRMB shares are trading higher by 2.91% to $56.28 on the last check Tuesday.
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