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Deere: Wall Street’s Views at the End of 2017

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Analysts’ consensus on Deere

Currently, Deere (DE) has been tracked by 24 analysts—compared to 22 analysts in October. Among the analysts, 46% recommended the stock as a “buy,” 50% recommended a “hold,” and 4% recommended a “sell” for Deere. Analysts’ consensus indicates that Deere’s target price is $156.30, which implies a return potential of 4.60% from the closing price as of December 14, 2017.

Since October, analysts’ consensus target price on Deere has been on an upward trend. It has risen from $130.75 to the current target price of $156.30, which indicates analysts’ bullish opinion on the stock.

Why “buy” Deere?

Deere ended fiscal 4Q17 on a strong note with a revenue increase of 23%, while its earnings per share rose 74.40%. Deere’s guidance for fiscal 2018 also remained positive. Its revenue is expected to grow 22%, while its net income is estimated at ~$2.6 billion. The growth will mainly be driven by organic growth. Its growth will also be driven by acquiring the Wirtgen Group. The acquisition is expected to be completed by December 2017. As a result, analysts recommended a “buy” or “hold.”

Views from individual brokerage firms

  • Goldman Sachs (GS) recommended a target price of $196.00 for Deere, which implies a return potential of 31.10% from the closing price of $149.44 as of December 14, 2017.
  • Deutsche Bank (DB) rated Deere as a “buy.” It recommended a target price of $167, which implies a return potential of 11.75% over the closing price of $149.44 as of December 14, 2017.
  • Barclays (BCS) has initiated its coverage on Deere. It rated Deere as “overweight,” but it didn’t provide a target price.

Investors looking for indirect exposure to Deere can invest in the iShares MSCI Global Agriculture Producers ETF (VEGI). The fund has invested 11% of its portfolio in Deere as of December 14, 2017.

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