Deere and PLA
On July 31, Deere (DE) announced that it has entered into a definitive agreement to acquire PLA—an Argentinian-based company. PLA is a private company that manufactures agriculture sprayers, planters, and specialty products. PLA, which was founded in 1975, has manufacturing facilities in Las Rosas, Argentina, and Canoas, Brazil. PLA is active on four continents with ~450 employees. The acquisition helps Deere strengthen its position in Argentina. However, Deere didn’t disclose the financial aspects of the acquisition.
John May, Deere’s president of Agricultural Solutions and chief information officer, said, “The PLA acquisition enhances John Deere’s commitment to customers as we continue to provide innovative, cost-effective equipment, technology, and services to improve their productivity.”
Deere’s stock price
On the day that the deal was announced, Deere stock gained ~4.8%. However, the stock gave up some gains because tariff wars resurfaced again. Deere gained 1.8% and closed at $143.36 for the week ending August 3. Despite the gains, the stock traded 2.2% below the 100-day moving average price of $146.60. In the past three months, Deere’s 100-day moving average price has fallen from ~157.80 to $146.60, which indicates a downward trend in the stock.
Deere stock has fallen 9.2% year-to-date. However, analysts are bullish on Deere stock. Analysts have recommended a target price of $180.8, which implies an upside of 26.1% based on the company’s closing price on August 3. Caterpillar (CAT), AGCO (AGCO), and CNH Industrial (CNHI) have fallen 12.1%, 12.4%, and 11.0%, respectively. Deere’s 14-day RSI (relative strength index) score of 53 indicates that the stock isn’t overbought or oversold.
Investors can hold Deere indirectly through the iShares MSCI Global Agriculture Producers ETF (VEGI), which had 13.1% of its portfolio invested in Deere as of August 3.