Cautious Outlook on Deere’s Ambitious Growth Plans Amid Market Uncertainties

BMO Capital analyst Joel Jackson has reiterated their neutral stance on DE stock, giving a Hold rating on December 7.

Joel Jackson’s rating is based on several considerations surrounding Deere’s future growth prospects and current market conditions. While Deere has laid out an ambitious five-year plan with potential for significant earnings per share (EPS) growth, the exact timing and execution of these targets remain uncertain. The company’s management has set a goal of achieving $40-45 EPS by 2030, which could lead to a valuation of $600-700. However, Joel Jackson’s more conservative estimate of $34 EPS by 2030, with a 6% revenue compound annual growth rate and 18% margins, suggests a target price of $460, reflecting current economic contractions.
Another factor influencing the Hold rating is the extended cycle length that Deere anticipates, with expectations of a 10-year cycle rather than the typical 7-8 years. This longer cycle, coupled with the current suspension of share buybacks, adds to the uncertainty. Additionally, while Deere is targeting growth in areas such as North American excavators and automation, the realization of these goals is back-half loaded, and the company has adjusted its 2030 revenue goals for services. Given these factors, Joel Jackson remains cautious, leading to a Hold rating on Deere’s stock.

In another report released on December 7, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $518.00 price target.