Deere's Resilience Shines Through Tariffs, Analysts Raise Price Forecasts

Core Viewpoint - Analysts have raised price forecasts for Deere & Company following stronger-than-expected second-quarter results, despite a year-over-year decline in net sales and revenue [1][2]. Financial Performance - Deere reported net sales and revenue of $12.76 billion, a 16$10.79 billion [1]. - The company expects FY25 net income to be between $4.75 billion and$5.5 billion, an increase from the previous estimate of $5 billion to$5.5 billion [1]. Analyst Insights - Raymond James analyst Tim Thein raised the price forecast from $530 to$560 while maintaining an Outperform rating, citing stronger-than-anticipated second-quarter operating results [1][2]. - Thein noted that the Production & Precision Agriculture (PP&A) segment is expected to have the smallest direct percentage impact from anticipated tariff-related costs of approximately 400 million in the second half of the year [2]. Margin and Cost Considerations - The analyst highlighted that the PP&A margin guidance for the second half of 2025 was the most surprising aspect of the recent quarter and outlook [3]. - Despite a new 100 million impact from tariff-related costs, the analyst believes the implied decremental margin assumption of around 80% will ultimately prove conservative [4]. Earnings Estimates - FY25 EPS estimates were lowered to $19.25 from$19.80, as the positive impact of the second-quarter performance was offset by reduced margin assumptions for the second half of the year [5]. - DE Davidson analyst Michael Shlisky maintained a Buy rating with a price forecast of $542, noting that Deere's production and Precision Ag revenues exceeded estimates by around 6$532.78 as of the last check on Friday [7].