Deere & Co. (NYSE:DE) delivered a stronger-than-expected fiscal first-quarter performance and modestly lifted its 2026 outlook on Thursday.
“While the global large agriculture industry continues to experience challenges, we’re encouraged by the ongoing recovery in demand within both the construction and small agriculture segments,” said John May, chairman and CEO of John Deere.
“These positive developments reinforce our belief that 2026 represents the bottom of the current cycle and provides us with a strong foundation for accelerated growth going forward.”
Analyst View
RBC Capital Markets analyst Sabahat Khan said Deere reported fiscal first-quarter results that topped expectations and modestly raised its fiscal 2026 outlook, reinforcing the view that the agriculture equipment cycle may be nearing a bottom.
Following the results, RBC raised its price forecast on Deere to $736 from $541 and reiterated its Outperform rating, citing improving earnings visibility and increased confidence in the company’s longer-term growth trajectory.
Equipment Operations showed momentum, with net sales rising 17.5% year over year as higher shipment volumes and favorable foreign exchange more than offset muted pricing.
By segment, Production and Precision Ag increased 3.1% year over year, Small Ag and Turf climbed 24.0%, and Construction and Forestry rose 33.9%, driven primarily by volume and foreign exchange tailwinds.
Margins Face Tariff Pressure
Profitability, however, faced pressure. Equipment Operations operating margins declined 184 basis points year over year to 5.9%, largely due to tariff impacts. Management reiterated expectations for about $1.2 billion in direct tariff expenses in fiscal 2026.
Despite these headwinds, Deere modestly improved its fiscal 2026 outlook across most of its portfolio, with only South America tractors and combines revised lower. The updated guidance implies about a $375 million increase at the midpoint of Equipment Operations net income and roughly a $500 million improvement at the midpoint of Equipment Operations operating cash flow.
Farm Backdrop Steady
Khan described the agricultural backdrop as steady rather than robust. Global crop production remains stable, farm income expectations are improving modestly, and recent policy support and commodity demand signals, including China’s return to U.S. soybean purchases, provide incremental support.
Dealer inventory drawdowns through 2025 have better aligned production with retail demand. Management continues to view 2026 as a potential cycle trough, positioning 2027 for a healthier recovery if replenishment follows.
On valuation, Khan raised the price forecast to $736, applying a roughly 32-times multiple to RBC’s fiscal 2027 adjusted EPS estimate of $23.02. The premium multiple, he said, is supported by improving earnings quality and the potential for renewed growth as the cycle turns.
Street Turns More Bullish
Other analysts also turned more bullish on Deere. UBS’ Steven Fisher maintained a Buy rating and raised his price forecast to $775 from $535, while Truist Securities’ Jamie Cook reiterated a Buy rating and increased her forecast to $793 from $612. Bank of America Securities’ Ross Gilardi maintained a Neutral rating and raised his price forecast to $672 from $502.
DE Price Action: Deere shares were down 0.54% at $658.42 at the time of publication on Friday. The stock is approaching its 52-week high of $674.18, according to Benzinga Pro data.
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