Last Update 05 Feb 26

AGCO: Precision Agriculture Aftermarket And Tariff Risks Will Shape Mid Cycle Outlook

Analysts have nudged their price targets on AGCO higher into a tighter $114 to $120 range, citing a mix of support for the aftermarket and precision agriculture story, along with fresh tariff related margin concerns in Europe.

Analyst Commentary

Recent research on AGCO centers on a mid range view, with analysts weighing the appeal of its aftermarket and precision agriculture focus against fresh questions on European tariff exposure and where the stock sits in the machinery cycle.

Bullish Takeaways

Bullish analysts point to the aftermarket and precision agriculture business as a key pillar for execution and see this mix as supportive of more resilient revenue and margin visibility over time.
The move to a tighter target band around $114 to $120 is framed as consistent with what some analysts describe as a balanced mid cycle valuation skew, which they view as reasonable relative to the company’s current positioning.
Initiation at an Equal Weight rating with a $114 target suggests that, at current levels, the stock is viewed as fairly aligned with its fundamentals, rather than clearly expensive on traditional metrics such as P/E or P/B.
Bullish analysts highlight that precision agriculture remains central to the long term story and argue that it could help sustain growth opportunities as farmers adopt more technology intensive equipment and services.

Bearish Takeaways

Bearish analysts flag tariff related risks in Europe as a source of potential margin pressure, which could cap upside if cost headwinds or pricing pressures are not offset by efficiency gains.
Some research expresses a preference for construction machinery names at this point in the cycle, implying that AGCO may face tougher relative comparisons on growth and capital allocation versus those peers.
Neutral and Equal Weight stances, even alongside higher targets within the $114 to $120 range, indicate that a portion of the positive aftermarket and precision agriculture story may already be reflected in the current share price.
With price targets clustered tightly together, bearish analysts suggest there may be limited room for multiple expansion without clearer evidence of outperformance on margins or additional growth drivers.

What’s in the News

AGCO plans to exhibit equipment and new technology from its Fendt and Massey Ferguson brands at the World Ag Expo in Tulare, California, on February 10 to 12. The company will highlight its presence at a major North American farm show (Key Developments).
The Fendt exhibit will feature the North American debut of the Fendt e100 Vario compact battery powered tractor, which uses a versatile electric drive and is designed to work with both traditional and electrified attachments. It can reach a full charge in under five hours (Key Developments).
Additional Fendt equipment on display will include the Fendt 1000 Vario Gen4 tractor, the Fendt 200 V/F/P Vario series for vineyards and specialty crops, and the Fendt Rogers 900 Series rear boom applicator with two height adjustable clearance (Key Developments).
Massey Ferguson will showcase the MF 9S tractor, its compact utility lineup and Hesston by Massey Ferguson hay equipment, paired with its PTx FarmEngage fleet and farm management technology to support day to day operations (Key Developments).
Massey Ferguson will also introduce MF Always Running, a built in warranty program aimed at providing more predictable ownership costs, reduced risk and higher uptime for farmers (Key Developments).

Valuation Changes

Fair Value: The fair value estimate is unchanged at $118.50, keeping the core valuation anchor steady.
Discount Rate: The discount rate has fallen slightly from 9.31% to 9.24%, which modestly increases the weight on future cash flows in the model.
Revenue Growth: The revenue growth assumption is effectively flat, remaining at 4.51%, indicating no meaningful shift in top line expectations.
Profit Margin: The profit margin input is unchanged at 7.27%, indicating no material adjustment in expected profitability.
Future P/E: The future P/E multiple has edged down from 13.73x to 13.71x, a minimal change that leaves the valuation multiple largely in line with prior assumptions.

Investments in premium brands, precision agriculture, and digital solutions position AGCO for stronger growth, higher margins, and enhanced earnings quality.
Structural improvements and aftermarket expansion support operational efficiency, stable earnings, and robust capital returns to shareholders.
Prolonged weak demand, higher costs from tariffs, and elevated inventories threaten AGCO's profitability and undermine both market share gains and long-term margin targets.

Catalysts

About AGCO

Manufactures and distributes agricultural equipment and replacement parts worldwide.What are the underlying business or industry changes driving this perspective?

The global push for higher agricultural productivity due to population growth and rising food demand continues to drive AGCO's investments in premium brands (like Fendt) and expansion into underserved regions, positioning the company to outgrow industry demand and materially lift long-term revenue growth.
Accelerating adoption of precision agriculture and digital solutions is expected to significantly increase demand for AGCO's retrofit technologies (e.g., Precision Planting and PTx), supporting the shift toward higher-margin software-driven revenue, which should enhance future margins and earnings quality.
Recent structural improvements-including reduced fixed costs, lower dealer inventories, and dealer-focused initiatives like FarmerCore-are expected to deliver improved operational leverage and working capital efficiency, setting a foundation for higher free cash flow and increased net margins as demand recovers.
AGCO's global parts and aftermarket expansion leverages both e-commerce and service innovation, capitalizing on the aging installed base and growing focus on recurring, high-margin revenues; this strategy is likely to drive more stable and resilient long-term earnings and margin expansion across cycles.
With the resolution of the TAFE partnership, AGCO has greater capital allocation flexibility, enabling a $1 billion share buyback program; this buyback, combined with expected mid-cycle margin improvement targets, should accelerate EPS growth and return capital to shareholders.

AGCO Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming AGCO's revenue will grow by 5.9% annually over the next 3 years.
Analysts assume that profit margins will increase from 1.0% today to 6.6% in 3 years time.
Analysts expect earnings to reach $800.1 million (and earnings per share of $11.01) by about September 2028, up from $99.6 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.8x on those 2028 earnings, down from 80.6x today. This future PE is lower than the current PE for the US Machinery industry at 24.7x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.91%, as per the Simply Wall St company report.

AGCO Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Prolonged weak demand in North America and Western Europe, driven by cautious farmer sentiment, persistently high input costs, lower export demand, and ongoing policy uncertainty, risks suppressing AGCO's revenues and operating margins in its core markets over the long term.
Tariffs and global trade conflicts-especially newly announced EU tariffs and continuing U.S. policy uncertainty-could further compress AGCO's margins by increasing costs and forcing delayed or diluted pricing actions, directly impacting net earnings and profitability.
Elevated dealer inventories in North America and ongoing underproduction (down over 50% in Q3 and Q4) suggest a risk of continued negative operating margins in that region, which may weigh on consolidated company earnings if the inventory overhang and demand weakness persist longer than expected.
AGCO's market share gains, particularly for premium brands like Fendt, could be undermined by increased costs relative to competitive products if tariffs lead to higher relative prices or if production footprint changes are not implemented in time, creating risk to both future revenue growth and margin expansion plans.
Structural industry headwinds such as four consecutive years of industry decline in Europe, growing factory under-absorption costs during downturns, and potential for further cost inefficiencies from supply chain or production mismatches threaten AGCO's ability to achieve mid-cycle margin targets and sustainable cash flow growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $123.769 for AGCO based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $145.0, and the most bearish reporting a price target of just $97.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $12.1 billion, earnings will come to $800.1 million, and it would be trading on a PE ratio of 14.8x, assuming you use a discount rate of 8.9%.
Given the current share price of $107.61, the analyst price target of $123.77 is 13.1% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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