Deere & Company Navigates Challenges Amid Market Gains

Moline, Illinois-based Deere & Company (DE) stands as a leading manufacturer in agricultural equipment, notably under its John Deere brand. With a market capitalization of $130.8 billion, the company aims to transform agriculture by integrating technology to enhance automation, simplify tasks, and ensure precision in farming operations.

Stocks Surge Amid Broader Market Gains

In the past year, Deere has surpassed the broader market, with shares jumping 24.8%. In contrast, the S&P 500 Index ($SPX) recorded a growth of 22.3%. This year alone, Deere’s stock is up 13.3%, while the S&P 500 saw a bump of only 4% during the same period.

When compared to the Industrial Select Sector SPDR Fund (XLI), which saw a return of 16.7% over the year and a 4.4% increase year-to-date, Deere’s performance shines even brighter.

Disappointing Earnings Report Raises Concerns

However, on Feb. 13, shares of Deere fell by 2.2% after the announcement of its Q1 earnings, which revealed adjusted revenues of $6.8 billion—a drop of 35.2% compared to the same quarter last year. Notably, profit per share was $3.19, beating Wall Street’s expectations of $3.13, but it marked a steep decline of 48.8% year-over-year. The downturn can be linked to challenges in core equipment segments, lower shipment volumes, and heightened market uncertainties, including increased interest rates.

Moreover, Deere’s outlook for fiscal 2025 is cautious. The company anticipates a decline in sales across key segments: 15%-20% for Production & Precision Agriculture, 10% for Small Agriculture & Turf, and 10%-15% for Construction & Forestry. Despite these challenges, Deere has reaffirmed its net income guidance for fiscal 2025 to range between $5 billion to $5.5 billion, reflecting effective cost management strategies.

Analyst Views and Future Projections

For the current fiscal year closing in October, analysts predict a 24.5% decline in Deere’s earnings per share (EPS), estimating it will fall to $19.35. Interestingly, the company has consistently exceeded Wall Street estimates in each of the last four quarters, building a solid earnings surprise history.

Among the 19 analysts covering Deere, the consensus rating is a “Moderate Buy.” This is based on nine “Strong Buy,” two “Moderate Buy,” and eight “Hold” ratings. It’s worth mentioning that this outlook is slightly less optimistic than it was three months ago, when ten analysts recommended a “Strong Buy.”

Following this, on Feb. 14, DA Davidson maintained a “Buy” rating on DE, increasing its price target to $542, suggesting a potential upside of 12.9% from the current levels. The average price target of $481.42 hints at marginal upside potential, while the highest target of $546 indicates a more optimistic upside of 13.7%.

On the date of publication, Neharika Jain did not hold any positions in the securities mentioned. This article is for informational purposes only. For further details, please refer to the Barchart Disclosure Policy here.

More news from Barchart

The opinions expressed in this article are those of the author and do not necessarily reflect those of Nasdaq, Inc.