Al Root

Deere stock wobbled early Monday as two analysts took opposing views about shares of the agriculture-equipment maker.

Goldman Sachs analyst Jerry Revich put shares of Deere on his firm's conviction Buy List, which is reserved for Goldman's best ideas.

Revich believes the time is right to buy into a cyclical trough, and now is as "[c]lose to as bad as it is likely to get," he wrote. Things have been sluggish for Deere as U.S. farm incomes fell in recent years. Deere generated about $45 billion in fiscal 2024 sales, down from $56 billion in fiscal 2023. Sales in fiscal 2025, which ends in October, are expected to be about $39 billion before growing again in fiscal 2026.

Revich also sees an opportunity for recurring sales from subscriptions. "Deere now derives 1% of sales from subscription with a goal to grow this business to 10% of sales by 2030," he wrote. Those sales are less cyclical and can carry higher profit margins than traditional equipment.

He rates shares at Buy and has a $583 price target.

Deere stock was down 0.5% at $478.87, following the bullish call, while S&P 500 and Dow Jones Industrial Average futures were up 0.4% and 0.3%, respectively.

Weighing on shares is a downgrade from another Wall Street analyst. Monday, Baird analyst Mig Dobre downgraded shares of all three ag-equipment maker Deere, AGCO, and CNH Industrial to Hold from Buy.

His kept his $501 price target for Deere. His target for AGCO stock went to $100 from $116, while his target for CNH went to $15 from $16.

Dobre wrote that the market well understands the cyclical dynamics, but that the timing of a recovery isn't certain as "weak commodity prices combine with ongoing trade and geopolitical uncertainty as well as potential cost inflation further pressuring [profit] margins."

One downgrade and one conviction buy has left investors unsure what to do.

Overall, about 42% of analysts covering Deere stock have Buy ratings, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%; a year ago, the Buy-rating ratio was about 52%.

It seems most of the Street isn't ready to call a positive inflection for Deere as Goldman is now.

Deere stock has been a strong performer despite the sliding analyst sentiment. Coming into Monday trading, shares added about 31% over the past 21 months. In fact, the average analyst price target for Deere stock is about $499, up from about $420 a year ago.

Write to Al Root at allen.root@dowjones.com

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March 03, 2025 07:48 ET (12:48 GMT)

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