Wall Street Analysts See Deere (DE) as a Buy: Should You Invest?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Deere (DE), and emphasizes the importance of using these recommendations in conjunction with other analytical tools like the Zacks Rank. Brokerage Recommendations - Deere has an average brokerage recommendation (ABR) of 1.95, indicating a consensus between Strong Buy and Buy based on 22 brokerage firms' recommendations [2] - Out of the 22 recommendations, 11 are Strong Buy and 1 is Buy, accounting for 50% and 4.6% of all recommendations respectively [2] Limitations of Brokerage Recommendations - Studies indicate that brokerage recommendations have limited success in guiding investors towards stocks with the best price increase potential [5] - Analysts often exhibit a positive bias due to the vested interests of brokerage firms, leading to a disproportionate number of favorable ratings compared to negative ones [6][10] Zacks Rank vs. ABR - The Zacks Rank is a proprietary tool that classifies stocks based on earnings estimate revisions, providing a more reliable indicator of near-term price performance compared to ABR [8][11] - Unlike ABR, which is based solely on brokerage recommendations, the Zacks Rank is updated frequently to reflect current business trends and earnings estimates [12] Current Earnings Estimates for Deere - The Zacks Consensus Estimate for Deere's earnings has remained unchanged at $18.58 over the past month, indicating growing pessimism among analysts regarding the company's earnings prospects [13] - The recent consensus estimate changes have resulted in a Zacks Rank of 4 (Sell) for Deere, suggesting caution despite the favorable ABR [14]