- Deere & Company (NYSE:DE) reported second-quarter FY22 results on Friday; below are the reactions from the analysts.
- Wells Fargo analyst Seth Weber lowered the price target for Deere to $410 (an upside of 22%) from $455 while maintaining the Overweight rating on the shares.
- The analyst understands angst around the rebalance but doesn't see it as thesis changing; he views the update as a function of the well-documented supply chain, production, and cost challenges and not a reflection on changing demand.
- Weber believes farm fundamentals remain supportive for another strong year in FY23 (particularly higher-HP/precision) and looks for initial comments on DE's early order program as a potential catalyst.
- Related: Deere Shares Drop After Q2 Results, Despite Beating Street Expectations
- Barclays analyst Adam Seiden lowered DE's price target to $400 (an upside of 19%) from $415 while maintaining the Overweight rating on the shares.
- The analyst says demand is strong and likely to remain so until farmer profitability subsides. Even so, if/when that does happen, while industry unit count would slow, the value of Deere's precision solutions/equipment to the farmer should increase (to improve yield), he added.
- DA Davidson analyst Michael Shlisky lowered Deere's price target to $445 (an upside of 33%) from $480 while maintaining the Buy rating on the shares.
- The analyst believes the company's demand environment is likely to remain stronger for longer. The only significant change to guidance (a reduction in FY22 free cash flow due to inventory build) is likely to reverse itself next year.
- Shlisky notes the global Ag market continues to tilt in DE's favor--now for a multi-year period. As always, the weather is a key risk worth watching.
- Credit Suisse analyst Jamie Cook lowered Deere's price target to $472 (an upside of 41%) from $477 while maintaining the Outperform rating on the shares.
- The analyst mentions that the miss in the quarter reflects higher inflationary pressures and supply chain challenges broadly.
- Cook adds that PP&A is now sitting with higher inventory of partially completed machines tied to the supply chain, which are now expected to be shipped in 2H'22, leading to an unusually backend loaded year.
- The analyst believes DE's stock performance reflects expectations for a beat and raise on the core business and concerns on the 2H'22 guide. The 2H'22 guide is explainable, and the setup for 2023 remains stronger than the group, he adds.
- Price Action: DE shares are trading higher by 6.91% at $334.97 on the last check Monday.
