Shares of agricultural equipment maker Deere rise on pace of earnings and rising guidance

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Shares of Deere & Company rose more than 1% in premarket trading on Friday after the world’s largest farm equipment maker reported better-than-expected fiscal first-quarter earnings and raised its full-year profit forecast.

The agriculture, construction and forestry equipment maker said net equipment sales rose nearly 6% to $8.5 billion, beating Wall Street’s consensus estimate of $8.2 billion. dollars. The company’s net income fell to $903 million, or $2.92 per share. It also exceeded market expectations of $2.38.

The world’s largest farm equipment maker forecasts net profit for fiscal 2022 of between $6.7 billion and $7.1 billion, higher than the previous estimate of $6.5 billion to $7.0 billion.

“Deere (DE) FY 1Q22 EPS of $2.92 against cons of $2.35 and Jef of $2.20. F1Q was a beater across the board, with slightly higher sales and margin and a lower tax rate, all contributing DE has raised its F22 outlook for net income and now forecasts net income of approximately $6.9 billion at mid-term (previously: $6.75 billion at mid-term). course), even though the consensus was already at $6.9 billion. The forecast implies an additional EBIT margin of around 25%,” noted Stephen Volkmann, equity analyst at Jefferies.

Deere stock rose more than 1% to $385.50 in premarket trading on Friday. The stock is up nearly 11% so far this year after jumping more than 27% in 2021.

Analyst Comments

“Despite a significant number of headwinds in 1Q, Deere (DE) posted a clean up and down pace and raised its FY22 guidance by 2.5%. DE’s newly launched Leap ambitions – y including a 20% Equip Ops OROS target (vs. 15% mid-cycle operating margin target previously) – should refocus investors on the secular LT thesis,” noted Courtney Yakavonis, an equity analyst at Morgan Stanley.

“Deere (DE) is one of the most defensive and highest quality names within the broader machinery universe, given historically lower cyclicality in agricultural equipment and a strong management execution. Fiscal 22 should see a continued acceleration in the replacement cycle for large North American farms as commodity tailwinds are complemented by moderating trade headwinds and improving farmer confidence. As mgmt continues to execute against its mid-cycle operating margin target of 15%, we see continued momentum in DE’s margin improvement narrative – representing one of most appealing idiosyncratic margin enhancement narratives in the wider Machines group. »

Deere Stock Price Forecast

Fifteen analysts who offered stock quotes for Deere over the past three months forecast a 12-month average price of $435.50 with a high forecast of $487.00 and a low forecast of $320.00.

The average price target represents a 14.45% change from the last price of $380.53. Of these 15 analysts, 11 rated “Buy”, three rated “Hold”, while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base price target of $485 with a high of $664 in a bullish scenario and $261 in a worst-case scenario. The investment bank gave the farm equipment maker an “overweight” rating.

Several analysts also updated their stock outlook. DA Davidson raised the target price to $455. Deutsche Bank raised the price target to $400 from $398. Oppenheimer raised the price target to $425 from $395. Barclays raised the target price from $400 to $415.

Technical analysis suggests that it is good to hold as the 100 day moving average and the 100-200 day MACD oscillator are showing a mixed signal.

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This article originally appeared on FX Empire

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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