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On Thursday, Truist Securities analyst Jamie Cook announced an increase in the price target for Deere & Company (NYSE:DE) stock, raising it to $619 from the previous target of $546, while reaffirming a Buy rating. This adjustment followed Deere’s stock closing up by 4% on Thursday, outperforming the S&P 500 which remained relatively flat.
Deere’s second-quarter earnings for fiscal year 2025 surpassed the consensus earnings per share (EPS) estimates by 19%, attributed to stronger sales and improved margin performance in their Production & Precision Ag (PPA) and Small Ag & Turf (SAT) segments. However, their Construction & Forestry (C&F) segment did not meet sales and profitability expectations.
Despite the positive earnings report, Deere revised its net income forecast for FY2025 downward by $125 million to a range of $4.75 billion to $5.5 billion, citing tariffs as a significant headwind. The company anticipates these tariffs to have a $500 million impact, with $100 million already affecting the second quarter. Deere expects the C&F segment to bear approximately 40% of these costs, SAT around 35%, and PPA about 25%, which could pressure margins in the latter half of the year.
Nevertheless, Deere’s order book for PPA is full through October, providing clear visibility through the fiscal year’s end. Additionally, channel inventory is well-balanced, which positions the company to align production with retail demand in the second half of the year. This setup is seen as favorable for Deere’s earnings growth in FY2026.
Deere has initiated its early order program for sprayers this week and intends to commence its planter early order program in June. The company is considering a price increase of 2-4% for PPA products in 2026, aiming to preserve margins through price realization and cost mitigation strategies.
The analyst also highlighted that current data points support the notion that 2025 represents the low point of the current cycle. In North America, crop prices have stabilized, and the majority of farmers have received government aid under the Emergency Commodity Assistance Program. Furthermore, positive developments in Brazil’s corn and soybean sectors, along with signs of improvement in Europe’s dairy, livestock, and arable farming, could offer additional upside potential. For deeper insights into Deere’s financial health, valuation metrics, and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which includes over 30 key metrics and expert analysis.
In other recent news, Deere & Company reported impressive financial results for the second quarter of 2025, beating market expectations. The company achieved an earnings per share (EPS) of $6.64, surpassing the forecasted $5.56, and generated revenue of $12.76 billion, exceeding the expected $10.98 billion. Despite a 16% year-over-year decline in net sales, Deere’s strategic focus on precision agriculture technologies and cost management helped mitigate the impact. The company’s equipment operations margin stood at 18.8%, reflecting strong operational performance. Additionally, Deere has projected a net income outlook for fiscal year 2025 between $4.75 billion and $5.5 billion. Analysts from various firms have noted the company’s resilience in navigating market challenges, with some highlighting potential tariff impacts estimated at $500 million for the fiscal year. Deere’s commitment to innovation and sustainable growth remains steadfast, with plans to invest $20 billion in U.S. manufacturing and technology over the next decade.
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