Bernstein reiterates Trimble stock outperform with $80 target

On Thursday, Bernstein SocGen Group maintained a positive stance on Trimble Navigation (NASDAQ:TRMB), reaffirming an Outperform rating and a price target of $80.00, representing a potential 21% upside from the current price of $66.30. InvestingPro analysis shows the company maintains a "GOOD" overall financial health score, with particularly strong marks in profitability metrics. The firm’s analysts highlighted the company’s ability to navigate through uncertain times, emphasizing the resilience of construction technology demand. Trimble’s Architecture, Engineering, Construction, and Operations (AECO) segment reported a 19% year-over-year growth in organic Annual Recurring Revenue (ARR), an increase from 18% in the previous quarter, with net retention rates at 110%. This growth comes despite a challenging environment where revenue declined 3% in the last twelve months to $3.68 billion. For deeper insights into Trimble’s financial performance and growth prospects, InvestingPro subscribers can access comprehensive analysis and 10 additional ProTips.

Despite observing a slowdown in purchasing decisions from larger contractors, who make up about 10% of the business and tend to focus on Enterprise Resource Planning (ERP) systems, and a softening of budgets among public entities, Trimble’s cross-selling strategy has been effective. The company maintains strong profitability with a 67.7% gross margin and healthy return on assets of 15.8%, demonstrating operational efficiency despite market challenges. The strategy, known as Trimble Construction 1, accounted for two-thirds of bookings and experienced mid-teens growth. New partnerships, such as the renewed relationship with Caterpillar (NYSE:CAT) last year and recent collaborations with Liebherr and Deere (NYSE:DE), have contributed to increased hardware penetration.

The company also appears to be well-positioned to manage direct impacts from tariffs. Management expects tariffs to add approximately $10 million to the Cost of Goods Sold (COGS) per quarter in the Field System segment, which represents around 4% of the annual COGS of $1.19 billion. With a moderate debt level and strong financial health metrics, including an Altman Z-Score of 5.71, Trimble demonstrates robust financial stability to weather these additional costs. However, a 4% surcharge has already been implemented to counterbalance these additional costs. Trimble’s limited exposure to tariffs is attributed to its hardware production being primarily located in the United States and Mexico, with minimal reliance on China.

Trimble has also been actively expanding its technology outlets, with four new signings expected to enhance the company’s market reach and further drive hardware penetration. This strategic movement is part of Trimble’s ongoing efforts to strengthen its position in the construction technology sector and provide robust solutions despite the current economic uncertainties.

In other recent news, Trimble Inc. reported better-than-expected first-quarter results, highlighting a strong start to the year. The company posted adjusted earnings per share of $0.61, surpassing the analyst estimate of $0.58. Revenue for the quarter reached $840.6 million, exceeding the consensus estimate of $811.4 million, despite a 12% year-over-year decline. Trimble’s annualized recurring revenue (ARR) hit a record high of $2.18 billion, up 7% year-over-year and 15% on an organic basis. This growth reflects the resilience of Trimble’s business model and its ongoing execution of the Connect & Scale strategy. The company expects second-quarter revenue between $815 million and $845 million, with adjusted EPS forecasted at $0.59 to $0.65. For the full year 2025, Trimble maintained its guidance, projecting revenue of $3.37 billion to $3.47 billion and adjusted EPS of $2.76 to $2.98. Additionally, Trimble reported significant share repurchases amounting to $627.4 million, indicating confidence in its financial position.

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