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Moline, Illinois-based Deere & Company (DE) is one of the world's largest producers of agricultural equipment and manufactures agricultural machinery under its John Deere brand. Valued at a market cap of $130.8 billion, the company is focused on revolutionizing agriculture with technology in an effort to make farming automated, easier, and more precise across the production process.
This agricultural equipment manufacturer’s shares have outpaced the broader market over the past 52 weeks. Deere has rallied 24.8% over this time frame, while the broader S&P 500 Index ($SPX) has gained 22.3%. Moreover, the stock is up 13.3% on a YTD basis, compared to SPX’s 4% rise during the same time frame.
Zooming in further, DE has also outshined the Industrial Select Sector SPDR Fund’s (XLI) 16.7% return over the past 52 weeks and a 4.4% gain on a YTD basis.
On Feb. 13, DE’s shares plunged 2.2% following its Q1 earnings release as the company reported weaker-than-expected Q1 adjusted revenues of $6.8 billion, which fell 35.2% from the year-ago quarter. However, its profit of $3.19 per share surpassed the Wall Street estimates of $3.13 but declined by a whopping 48.8% year-over-year. The company’s disappointing performance can be primarily attributed to setbacks in its core equipment segments, fueled by lower shipment volumes and ongoing market challenges marked by higher interest rates and macroeconomic uncertainty.
Adding to investor concerns, Deere provided a cautious outlook for fiscal 2025, expecting Production & Precision Agriculture sales to decline 15%-20%, Small Agriculture & Turf sales to fall 10%, and Construction & Forestry sales to drop 10%-15%. This might have further dampened investor confidence. Nonetheless, despite these challenges, the company reaffirmed its fiscal 2025 net income guidance between $5-$5.5 billion, reflecting strong cost management.
For the current fiscal year, ending in October, analysts expect Deere & Company’s EPS to decline 24.5% year over year to $19.35. The company’s earnings surprise history is promising. It topped the Wall Street estimates in each of the last four quarters.
Yet, among the 19 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on nine “Strong Buy,” two “Moderate Buy,” and eight “Hold” ratings.
This configuration is slightly less bullish than three months ago, with 10 analysts suggesting a “Strong Buy” rating.
On Feb. 14, DA Davidson maintained a “Buy” rating on DE and raised its price target to $542, which indicates a 12.9% potential upside from the current levels.
The mean price target of $481.42 represents a marginal upside from Deere & Company’s current price levels, while the Street-high price target of $546 suggests an upside potential of 13.7%.
