Deere stock outlook uncertain for 2026 as UBS reiterates Buy rating

Investing.com - UBS reiterated its Buy rating and $535.00 price target on Deere (NYSE:DE) stock following meetings with the company’s management. The target represents potential upside from the current price of $473.26, though InvestingPro analysis suggests the stock may be trading above its Fair Value.

UBS analyst Steven Fisher noted that Deere management discussed several key topics during the meetings, including regional market trends, inventory reductions, tariffs, replacement cycles, and precision technology. As a prominent player in the Machinery industry with a market cap of $128 billion, Deere maintains strong financials with a current ratio of 2.23, indicating healthy liquidity.

For North American large agriculture trends in 2026, Deere indicated a wide range of possible outcomes due to "multiple layers of uncertainty," according to the UBS report. The company observed that farmers are currently not rushing to place orders for new equipment. This caution appears justified, as InvestingPro data shows seven analysts have revised their earnings downwards for the upcoming period, with revenue expected to decline by 26% this year.

Deere and its dealers are focusing on reducing used inventory for 2025/2026, partly by limiting new sales since each new sale results in another used unit returning to dealers. This inventory management strategy could impact near-term sales volumes.

While UBS noted that a potential trade deal for soybeans might boost farmer confidence and drive stronger year-end retail machine purchases, it’s "too early to call that," with UBS modeling North American large agriculture retail sales to decline next year. Deere will likely provide a wide guidance range for 2026, assuming a "lean" start to the year. Despite near-term challenges, the company maintains financial strength with sufficient cash flows to cover interest payments and has maintained dividend payments for 55 consecutive years. For deeper insights into Deere’s financial health and detailed valuation analysis, access the comprehensive Pro Research Report available on InvestingPro.

In other recent news, Deere & Company has seen several notable developments. RBC Capital initiated coverage on Deere with an Outperform rating and set a price target of $542, highlighting the company’s leadership in the transition to technology-enabled agriculture. UBS upgraded Deere’s stock rating from Neutral to Buy, adjusting its price target to $535, citing expectations of an earnings recovery beginning in fiscal 2027. Additionally, Deere’s subsidiary, Deere Funding Canada Corporation, has issued $500 million in 4.15% notes due in 2030, with interest payments starting in 2026. Truist Securities raised its price target for Deere to $609, maintaining a Buy rating and noting the cyclical trough in major markets. Meanwhile, DA Davidson lowered its price target to $580 from $595, also maintaining a Buy rating, and pointed out the significant downturn in global agricultural equipment markets. These developments reflect varying perspectives on Deere’s future prospects amid current market conditions.

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