Our $110 target price represents a ~26.5x P/E multiple on our 2025E EPS, above AGCO’s trading history over the last decade, which we think is warranted given our assumption that ag equipment markets are nearing a bottom in 2025.

We see the following key risks to the achievement of our target price:

Market Share – AGCO currently has relatively small share of the global combine market but has launched a new harvester in an effort to improve its relative positions in this market. In addition, the company is taking actions to expand its dealer base in the fastest growing agricultural regions in Brazil. If either of these initiatives outperforms/underperforms our expectations, our earnings estimates may be too low/high, and the stock could trade above/below our target price. 

M&A Risk – If integration of the Trimble JV proves more challenging than we anticipate, this could drive downside to our estimates and target price. Conversely, if AGCO meets or exceeds synergy targets this could drive upside to our estimates and target price.