Update shared on04 Sep 2025
Fair value Decreased 0.23%Analysts cite increased steel and aluminum tariffs as a margin headwind and lingering weak global ag demand, but also highlight Deere’s strong Q3 Small Ag performance, lower dealer inventories, and an expected cyclical earnings upturn in FY26, resulting in no change to the consensus price target at $534.61.
Analyst Commentary
- Bearish analysts lowered price targets to reflect updated Section 232 tariffs, which significantly increase the cost of steel and aluminum content in imported products, posing a headwind to margins and earnings.
- Bullish analysts note that while global agriculture equipment demand remains weak, Deere appears to be near a cyclical trough and is well-positioned for earnings improvement in FY26, supported by improving inventory levels and optimism in the U.S. market.
- Some analysts point to favorable Q3 earnings driven by better-than-expected demand in Small Ag and Turf and successful progress in reducing North American dealer inventories for large tractors and combines.
- Expectations for better sector growth in 2026 are underpinned by factors including a stronger North American harvest, clarity on biofuels policy, and success in used equipment merchandising.
- Despite tariff-related cost pressures and global end-market weakness, upward bias to sector earnings estimates is supporting further multiple expansion expectations among bullish analysts.
What's in the News
- Deere announced the launch of Operations Center PRO Service, a new digital tool providing enhanced machine diagnostics, repair support, and secure software updates for equipment owners and service providers, with phased replacement of Customer Service ADVISOR through 2026 (Key Developments).
- Deere revised its fiscal 2025 net income guidance downward, narrowing the expected range to $4.75 billion to $5.25 billion (Key Developments).
- From April 28 to June 27, 2025, Deere repurchased 581,000 shares (0.21% of shares outstanding) for $300.28 million, bringing total buybacks under the 2008 program to 53.98% of shares for $31.09 billion (Key Developments).
- Deere was removed from the Russell 1000 Value-Defensive Index and Russell 1000 Defensive Index effective June 28, 2025 (Key Developments).
- MarketWatch opinion article speculates Deere has a 10% chance of being Warren Buffett’s undisclosed $5 billion “mystery stock” industrial investment, but views Caterpillar as more likely (MarketWatch/Periodicals).
Valuation Changes
Summary of Valuation Changes for Deere
- The Consensus Analyst Price Target remained effectively unchanged, at $534.61.
- The Consensus Revenue Growth forecasts for Deere remained effectively unchanged, at 0.7% per annum.
- The Discount Rate for Deere remained effectively unchanged, at 9.25%.
Disclaimer
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