Deere’s Market Position and Tariff Challenges Lead to Hold Rating Amidst Mixed Outlook

Analyst Kyle Menges from Citi maintained a Hold rating on Deere (DE – Research Report) and increased the price target to $550.00 from $450.00.

Kyle Menges has given his Hold rating due to a combination of factors related to Deere’s current market position and future outlook. Despite raising the 2025 earnings per share estimate following a strong second quarter performance, Menges remains cautious about the medium-term earnings trajectory. This caution is influenced by the stabilization in the North American agricultural market, which is tempered by high inventories of used high horsepower equipment and elevated new machinery prices, leading to a muted outlook for farmer profitability.
Kyle Menges also considers the impact of tariffs on Deere’s margins, with significant costs expected in the second half of the fiscal year. Although Deere is taking a strategic approach to pricing, the full mitigation of tariff impacts is not anticipated until 2026. Additionally, while new agricultural equipment inventories are well-balanced, the high levels of used inventory, particularly in high horsepower tractors, present ongoing challenges. These factors collectively contribute to the decision to maintain a Hold rating, reflecting a balanced view of potential risks and opportunities.

In another report released on May 16, Bank of America Securities also reiterated a Hold rating on the stock with a $556.00 price target.