Jefferies Upgrades Deere to Hold Amid Improved Risk-Reward Profile
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Apr 08 2026
0mins
Should l Buy DE?
Source: seekingalpha
- Rating Upgrade: Jefferies has upgraded Deere (DE) from Underperform to Hold, indicating a more balanced risk-reward profile following a recent stock pullback, which suggests a renewed confidence in the company's prospects.
- Stock Price Impact: Shares of Deere have fallen approximately 15% since mid-February, which analysts believe has reduced downside risk and brought valuations closer to fair levels, thus providing a more attractive entry point for investors.
- Future Growth Expectations: Jefferies anticipates that Deere will achieve about 75% total growth in the upcoming cycle, primarily driven by higher volumes, indicating the company's strong competitive position in the market despite a smaller contribution from pricing.
- Profitability Outlook: The firm projects incremental margins of around 35% over the next three years, which will further enhance the company's profitability, leading Jefferies to set a price target of $550, reflecting an optimistic outlook on the company's future performance.
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Analyst Views on DE
Wall Street analysts forecast DE stock price to fall
15 Analyst Rating
8 Buy
7 Hold
0 Sell
Moderate Buy
Current: 584.190
Low
458.00
Averages
514.25
High
560.00
Current: 584.190
Low
458.00
Averages
514.25
High
560.00
About DE
Deere & Company is engaged in the delivery of agricultural, construction and forestry equipment. Its segments include production and precision agriculture (PPA), small agriculture and turf (SAT), construction and forestry (CF), and financial services (FS). PPA segment defines, develops and delivers global equipment and technology solutions for production-scale growers of large grains, small grains, cotton and sugarcane. SAT segment defines, develops and delivers global equipment and technology solutions for dairy and livestock producers, high-value and small acreage crop producers, and turf and utility customers. CF segment defines, develops and delivers a range of machines and technology solutions organized along the earthmoving, forestry and roadbuilding production systems. FS segment finances sales and leases by John Deere dealers of new and used production and precision agriculture equipment and others. Its products include John Deere Autonomous 8R Tractor and E-Power Backhoe.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
U.S. Farmers Face Repair Strain Despite Deere Settlement
- Rising Repair Costs: U.S. farmers report that despite Deere's $99 million settlement, ongoing increases in repair bills and limited access to independent service options continue to impose significant financial strain, highlighting the challenges farmers face in equipment maintenance.
- Software Access Restrictions: Deere has been accused of monopolizing repairs by restricting access to software tools necessary for modern tractors and combines, leading to estimated excess repair charges of $190 million to $387 million, reflecting a lack of competition in the industry.
- Farmers' Skepticism: Although Deere has promised to expand software access, the National Farmers Union expresses skepticism, suggesting that these changes may not adequately address the high dealer repair costs farmers face, indicating a lack of trust in the company's commitments.
- Ongoing Legal Challenges: The Federal Trade Commission has sued Deere, alleging illegal monopoly over repair services, with Deere stating it will contest the case, indicating the company's ongoing legal and competitive challenges in the market.
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Deere's Agriculture Business Faces Cyclical Downturn
- Agricultural Downturn: Deere's core agriculture business is experiencing a prolonged cyclical downturn, with revenue projected to decline by 25% to approximately $46 billion in 2025, reflecting ongoing weakness following a peak in U.S. farm income in 2022.
- Construction and Forestry Growth: Despite agricultural struggles, Deere's construction and forestry segment achieved a 34% year-over-year revenue growth, primarily driven by demand for data center construction, highlighting the company's potential in non-cyclical markets.
- Significant Order Backlog: The construction and forestry division saw a 50% increase in order backlog, indicating strong demand for heavy equipment, particularly in the context of AI infrastructure expansion, which enhances Deere's market position.
- Earnings Guidance Raised: Deere raised its 2023 earnings guidance to $4.5 billion to $5.0 billion, despite facing approximately $1.2 billion in annual tariff-related costs, with expected operating margins recovering to a range of 9% to 11% for the year, demonstrating management's confidence in future performance.
See More
U.S. Farmers Face Repair Strain Despite Deere Settlement
- Rising Repair Costs: U.S. farmers report that despite Deere's $99 million settlement, ongoing increases in repair bills and limited access to independent service options continue to impose significant financial strain, highlighting the challenges farmers face in equipment maintenance.
- Software Access Restrictions: Deere has been accused of monopolizing repairs by restricting access to software tools necessary for modern tractors and combines, leading to estimated excess repair charges of $190 million to $387 million, reflecting a lack of competition in the industry.
- Farmers' Skepticism: Although Deere has promised to expand software access, the National Farmers Union expresses skepticism, suggesting that these changes may not adequately address the high dealer repair costs farmers face, indicating a lack of trust in the company's commitments.
- Ongoing Legal Challenges: The Federal Trade Commission has sued Deere, alleging illegal monopoly over repair services, with Deere stating it will contest the case, indicating the company's ongoing legal and competitive challenges in the market.
See More
Caterpillar Stock Shows Strong Performance
- Breakout Growth: Caterpillar (CAT) has surged 120% since breaking out of a multi-year consolidation last July, showcasing its strong performance in the AI bull market and becoming a focal point for investors.
- Industry Leadership: Within the machinery sector, Caterpillar leads with a 33% annual return, significantly outperforming the S&P 500's 2%, highlighting its competitive edge and robust market demand in the heavy industrial space.
- Power & Energy Growth: Caterpillar's Power & Energy segment achieved $32.2 billion in sales for 2025, up 12%, with the power generation sub-segment surging 32% to $10.3 billion, primarily driven by data center demand, indicating strong future growth potential.
- Risk Management Strategy: Although Caterpillar's stock is currently well above its 200-day moving average at around $770, investors should wait for the next consolidation period to find a more attractive entry point, avoiding chasing the stock at elevated levels.
See More
U.S. Stocks Edge Up as PepsiCo and TSMC Shine
- PepsiCo's Quarter Performance: PepsiCo achieved its first volume growth in North American food business in two years, with CEO Ramon Laguarta addressing the industry's threat from GLP-1 weight-loss drugs, leading to a 1% rise in shares, demonstrating the company's resilience and adaptability in a competitive consumer goods market.
- TSMC Profit Surge: TSMC reported a 58% year-over-year profit increase, despite facing challenges with shortages of industrial gases; management noted a 'little bit softer' memory pricing, indicating ongoing demand and competitive pressures in advanced chip manufacturing that could impact future profitability.
- J.B. Hunt Transport Services: J.B. Hunt indicated the start of a new cycle with positive demand signals, reporting a first-quarter earnings beat and a 1% premarket share increase, reflecting potential growth opportunities in the transportation sector.
- Analyst Rating Changes: JPMorgan downgraded Corning to hold and cut its price target from $175 to $115, citing the need for greater earnings visibility to support stock upside, indicating a cautious market outlook on the company's future performance.
See More
Trump's Tariff Suspension Could Boost Stock Market
- Potential Impact of Tariff Suspension: If Trump suspends tariffs, many companies, particularly those importing clothing and toys like Nike and Mattel, are expected to see immediate earnings boosts, which could enhance market confidence significantly.
- Fed's Flexibility: The suspension of tariffs would provide the Federal Reserve with greater flexibility to potentially lower interest rates, which would be positive news for many stocks, especially given that inflation has risen due to tariffs.
- Temporary Market Rebound: Although a tariff suspension could trigger an initial market rebound, the momentum may be fleeting due to other factors such as geopolitical risks, necessitating caution among investors.
- Diversified Investment Strategy: In an uncertain market environment, investors should ensure their portfolios are well-diversified to cushion against underperforming sectors, with a long-term mindset being crucial to navigate market volatility.
See More
Trump's Potential Tariff Suspension Could Spark Market Rally
- Market Performance Monitoring: Trump has frequently referenced stock market performance on social media, claiming 53 all-time highs since the election, indicating his view of the market as a key indicator of his administration's performance, which may influence future policy decisions.
- Potential Impact of Tariff Suspension: Should Trump decide to suspend tariffs, many affected companies, such as Nike and Mattel, could see immediate earnings boosts, potentially driving stock prices higher, especially ahead of the upcoming congressional elections.
- Federal Reserve Policy Flexibility: The suspension of tariffs could provide the Federal Reserve with more room to lower interest rates, further stimulating the stock market, particularly as Trump's tariffs have been identified as a contributing factor to inflation.
- Complexity of Market Reactions: While a tariff suspension may lead to a short-term market rebound, geopolitical risks and skepticism about the permanence of such a suspension could limit the sustainability of the rally, prompting investors to maintain diversified portfolios to mitigate potential volatility.
See More
Deere's Agriculture Business Faces Cyclical Downturn
- Agricultural Downturn: Deere's core agriculture business is experiencing a prolonged cyclical downturn, with revenue projected to decline by 25% to approximately $46 billion in 2025, reflecting ongoing weakness following a peak in U.S. farm income in 2022.
- Construction and Forestry Growth: Despite agricultural struggles, Deere's construction and forestry segment achieved a 34% year-over-year revenue growth, primarily driven by demand for data center construction, highlighting the company's potential in non-cyclical markets.
- Significant Order Backlog: The construction and forestry division saw a 50% increase in order backlog, indicating strong demand for heavy equipment, particularly in the context of AI infrastructure expansion, which enhances Deere's market position.
- Earnings Guidance Raised: Deere raised its 2023 earnings guidance to $4.5 billion to $5.0 billion, despite facing approximately $1.2 billion in annual tariff-related costs, with expected operating margins recovering to a range of 9% to 11% for the year, demonstrating management's confidence in future performance.
See More
