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Deere: Analysts’ Views before Its Q1 Earnings

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Deere’s first-quarter earnings

Deere (DE) is scheduled to announce its earnings for the first quarter of fiscal 2019 on February 15 before the market opens. The announcement will be followed by a conference call at 10:00 AM EST. In this series, we’ll discuss analysts’ views on Deere before its first-quarter earnings. We’ll also discuss analysts’ earnings and revenue expectations for the first quarter.

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Analysts’ consensus

The number of analysts tracking Deere (DE) fell to 22—compared to 23 during the fourth-quarter earnings. Among the 22 analysts, 63% recommended a “buy,” 37% recommended a “hold,” and none of the analysts recommended a “sell.” Analysts’ views and recommended target prices are widely followed by investors to track the stock price and provide more insight into the company.

Analysts’ consensus for Deere indicates a target price of $176.00, which implies a return potential of ~8.2% over the closing price as of February 13. In the past three months, Deere’s consensus target price has increased marginally from $173.28 to the current target price, which indicates analysts’ optimism about the stock.

Deere missed analysts’ expectations for its fourth-quarter earnings—the third consecutive miss. However, Deere reported strong earnings growth during the quarter. Deere’s new product launches and the positive synergy impact from acquisitions will likely be important for its future growth. As a result, most of the analysts recommended a “buy” or a “hold.”

Brokerage companies’ recommendations

  • Bank of America Merrill Lynch cut Deere’s rating to “neutral” from “buy.” However, the brokerage didn’t provide a target price for  Deere.
  • Argus increased Deere’s target price to $170 from the earlier guidance of $166, which implies a return potential of 4.5% over the closing price on February 13.
  • Credit Suisse (CS) rated Deere as a “buy” and recommended a target price of $211, which implies a return potential of 29.7% over the closing price on February 13.

Investors could get indirect exposure to Deere through the Natural Resources ETF (HAP). HAP has invested 9.2% of its portfolio in Deere. The fund also provides exposure to CNH Industrial (CNHI) and Agco (AGCO) with weights of 1.9% and 0.75%, respectively.

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