UPDATE: Janney Capital Downgrades Trimble Navigation As Ag Cyclicality Dampens Growth, Multiple Expectations

In a report published Thursday, Janney Capital Markets analyst Ryan M. Connors downgraded the rating on Trimble Navigation Limited (NASDAQ: TRMB) from Buy to Neutral.In the report, Janney Capital Markets noted, “With the negative comps piling up, it is increasingly difficult to argue that Trimble's ag business is still a true secular growth story, and management itself concedes that the business is now more exposed to the ag cycle. This maturation of Trimble's flagship precision ag hardware business not only has ramifications for the growth outlook (i.e. growth will decelerate and become more volatile), but also impacts the valuation discussion (with a growth multiple more difficult to justify)."This cuts the core of the investment thesis, which is predicated in part on further secular growth in the precision ag business. As a result, although the outlook for E&C remains strong, we lower our rating to Neutral from BUY and also reduce our fair value estimate to $36 from $40 to account for a combination of lower estimates and multiple compression. Our revised FV estimate reflects a forward P/E of 19.7 times derived from a blended valuation approach that incorporates a reduced multiple assumption for the ag business.”Trimble Navigation closed on Wednesday at $34.23.