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With a market cap of $101.5 billion, based in Moline, Illinois, Deere & Company (DE) leads the global agricultural equipment industry. It revolutionizes farming with cutting-edge technology, catering to both large-scale production and small to mid-size growers globally.
Companies valued at $10 billion or more are generally considered “large-cap” stocks, and Deere & Company fits this criterion perfectly, exceeding the mark. It is renowned for its iconic John Deere brand and signature green and yellow color scheme, with a diversified revenue stream encompassing production-scale and small agriculture, turf operations, and road-building equipment.
However, the agricultural equipment manufacturer has slipped 18.2% from its 52-week high of $450, achieved in July last year. Shares of DE are down 2.2% over the past three months, underperforming the broader S&P 500 Index's ($SPX) 4.3% gains over the same time frame.
Longer term, DE is down 8.3% on a YTD basis, lagging behind SPX's 12% gains. Shares of Deere & Company have declined 3.2% over the past 52 weeks, compared to SPX's 24.2% returns over the same time frame.
To confirm the bearish price trend, DE has been trading mostly below its 200-day and 50-day moving averages since September last year despite some fluctuations.
Deere has underperformed due to reduced demand for agricultural and turf equipment driven by high borrowing costs, declining crop prices, and economic uncertainties leading to lower sales and profit forecasts. Moreover, despite better-than-expected Q2 earnings results, the stock declined 4.7% on May 16 after the company cut its 2024 profit forecast, citing reduced demand for farm equipment due to high borrowing costs and falling crop prices.
Nevertheless, top rival AGCO Corporation (AGCO) is underperforming – not just DE but the broader equity benchmarks. AGCO stock has declined 18.1% over the past 52 weeks and is down 17.1% on a YTD basis.
Despite the stock’s underwhelming price action, analysts think DE can recover soon. The stock has a consensus rating of “Moderate Buy” from the 24 analysts in coverage, and the mean price target of $429.09 is a premium of 16.5% to current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
