TRMB: Software Shift And 3-4-30 Goals Will Drive Margin Expansion

Analysts have modestly raised their Trimble price target by $2 to $100, citing increased confidence in the company’s transition toward higher-margin software solutions and its ability to meet or exceed long term recurring revenue and profitability goals.

Analyst Commentary

Bullish analysts view Trimble’s accelerating shift from hardware to software as a key driver of multiple expansion. They argue that a larger mix of high-margin, recurring revenue should support both earnings growth and a premium valuation over time.

They also point to the company’s long term financial framework, including its 2027 "3-4-30" goals, as a tangible roadmap that underpins confidence in execution and visibility into future cash flows.

Bullish Takeaways

• Bullish analysts see the transition to software and subscription models as structurally improving profitability, with recurring revenue growth supporting higher earnings quality and valuation multiples.
• Long term targets of $3B in annualized recurring revenue, $4B in sales and a 30 percent EBITDA margin by 2027 are viewed as achievable or beatable. This reinforces confidence in execution and potential upside to current consensus estimates.
• Resilience in end markets such as architecture, engineering and construction, even through a construction downcycle, is seen as evidence of durable demand that can sustain mid to high single digit top line growth.
• Growing customer preference for integrated software partners is cited as a secular tailwind that could expand Trimble’s addressable market and support continued re rating as investors better understand the business mix shift.

Bearish Takeaways

• Bearish analysts remain cautious that macro headwinds in construction and related verticals could delay project starts, pressuring near term revenue growth and limiting upside to estimates.
• There is concern that the ambitious 2027 financial targets leave little room for execution missteps. Any slowdown in software adoption or integration challenges could quickly weigh on sentiment and valuation.
• Some investors worry that the ongoing business model transformation may require elevated investment, potentially capping margin expansion in the intermediate term and narrowing the gap to higher valued software peers.
• Uncertainty around the pace at which legacy hardware revenue will be replaced by higher margin software subscriptions creates risk to the growth algorithm if customer transitions occur more slowly than expected.

What's in the News

• Trimble's board authorized a new share repurchase program of up to $1 billion with no set expiration, signaling confidence in long term cash generation and shareholder returns (buyback transaction announcement).
• The company raised its full year 2025 guidance, now expecting $3.545 billion to $3.585 billion in revenue and GAAP EPS of $1.69 to $1.77, reflecting execution on its Connect & Scale strategy (corporate guidance raised).
• Trimble provided fourth quarter 2025 guidance, projecting revenue between $927 million and $967 million and GAAP EPS of $0.59 to $0.67, framing near term expectations for growth and profitability (corporate guidance new/confirmed).
• Management reported completing repurchases of over 10.2 million shares for $727.4 million under the February 2025 authorization, reducing the share count by approximately 4.2 percent (buyback tranche update).
• At its 2025 Insight Tech Conference, Trimble unveiled a next generation, AI powered transportation management system and new AI agents and integrations designed to automate complex logistics workflows and enhance supply chain efficiency (product related announcement).

Valuation Changes

• Fair Value: Unchanged at approximately $98.45 per share, reflecting a stable view of intrinsic value despite model tweaks.
• Discount Rate: Risen slightly from about 8.58 percent to 8.59 percent, implying a marginally higher required return on equity.
• Revenue Growth: Fallen modestly from roughly 6.40 percent to 6.30 percent, signaling a slightly more conservative top line outlook.
• Net Profit Margin: Risen moderately from about 18.24 percent to 19.11 percent, incorporating expectations for improved profitability and a mix shift to software.
• Future P/E: Fallen slightly from around 37.4x to 35.8x, indicating a modestly lower valuation multiple applied to forward earnings.