Deere & Company (NYSE: DE) shares were up more than 50 percent in the past year prior to a 5.3 percent Friday sell-off in the wake of a disappointing earnings report. Now that the numbers are out, Deere investors must decide whether or not to join the ranks of the profit takers.
Unfortunately, not even Wall Street analysts can agree on where Deere is headed from here. Baird analyst Mircea Dobre said Deere’s numbers were bad enough for investors to throw in the towel. Baird downgraded the stock on Friday to Neutral and lowered its price target from $140 to $130.
“In the absence of material core EPS upside in 3Q with focus shifting to FY18, the road will get tougher as comps are difficult and farm fundamentals remain weak,” Dobre wrote.
Dobre said Deere’s multiple has expanded meaningfully during its recent run-up, and expectations of the company’s cost-cutting initiative are already baked into the stock at this point.
However, Credit Suisse analyst Jamie Cook said it’s too early to give up on Deere. According to Cook, early indicators of 2018 demand are encouraging.
“Specifically, DE noted that based on initial indications from the early order program orders for planters and sprayers were up strongly which is typically a leading indicator of AG equipment demand,” Cook wrote. Cook also sees…
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