Deere (DE) has completed the acquisition of three factories from its joint venture (JV) with Hitachi. The company has signed new license and supply agreements with Hitachi Construction Machinery. DE shares rose 3.76% to close at $360.02 on February 28.
Deere is a U.S. company that designs, manufactures, and distributes equipment used in agriculture, construction, and forestry.
Deere-Hitachi Joint Venture
In addition, the two companies have terminated their joint venture manufacturing and marketing agreements. Despite the termination, the factories will continue to manufacture Deere-branded excavators and forestry equipment. However, they will cease manufacturing Hitachi-branded products.
Deere will assume full control of the design aspect of its excavator portfolio products. It will also carry out feature updates, allowing it to respond rapidly to customer requirements. The company will also enjoy full control over the integration of excavators with other construction products.
A new supply agreement with Hitachi will see Deere continue to offer a full portfolio of excavators. Hitachi is tasked with distributing and providing support to these products as part of the agreement.
Stock Rating
Last week, Oppenheimer analyst Kristen Owen reiterated a Buy rating on Deere and raised the price target to $432 from $425, implying 19.99% upside potential to current levels. The analyst said solid Q1 results affirmed strong execution against labor and supply chain challenges. The analyst remains optimistic about the company’s technology and business model leadership.
Consensus among analysts is a Moderate Buy based on 8 Buys, 3 Holds, and 1 Sell. The average Deere price target of $433.27 implies 20.35% upside potential to current levels.
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