Analysts Remain Bullish on Deere Following Analyst Day

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Analysts Remain Bullish on Deere Following Analyst Day
Credit: © Reuters.

By Senad Karaahmetovic

Deere & Co (NYSE: DE ) held its Analyst Day yesterday where it declared a quarterly dividend of $1.13 per share.

The quarterly rate represents an additional 8 cents per share over the previous level, an increase of about ­­­8% per share.

On targets, the management reiterated a 10% recurring revenue goal and 20% operating margins by 2030.

At the event, the management also discussed Sense & Act catalysts, autonomous offerings & margin upside.

Morgan Stanley (NYSE: MS ) analyst Courtney Yakavonis attended the event, which was “tech-centered.”

For Yakavonis, the event “helped to re-focus the narrative towards many of the long-term EPS drivers for the company with increased cyclical resiliency complementing future Sense & Act catalysts and a heightened focus on autonomy,” she told clients in a note.

Goldman Sachs analyst Jerry Revich also maintained a Buy rating. He commented:

“Although DE’s business clearly remains cyclical (we see risk in C&F), product cycle momentum is building, as we estimate $1 bn of precision ag revenue tailwind in 2023E (Exact Emerge, Exact Rate, RTK, Exact Apply) and building visibility on Deere’s developing subscription product set. The target of fully autonomous row crop farming by 2030 represents significant upside vs. our $260 bn TAM estimate, as Deere’s product development velocity will benefit from a growing camera hardware installed base,” Revich wrote in a client note.

Finally, Citi analyst Timothy Thein said that the event showed how determined Deere’s efforts to push to accelerate technology on the farm are.

“The company sees several attributes contributing to its tech stack and lead in precision ag, such as its large installed base of connected machines, in-house hardware and software capabilities and its widely penetrated operations center. We would add its dealer network to the list, and the fact that both DE and it’s dealers have been 'all-in' on precision for well over a decade,” Thein said.

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