Deere & Co. (DE): Lack of Visibility Into 2017 Sales Keeps Piper Jaffray At Underperform

August 22, 2016 7:12 AM EDT
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Price: $107.12 +0.36%

Rating Summary:
    9 Buy, 11 Hold, 7 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 1 | Down: 2 | New: 3
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Piper Jaffray analyst, Brett Wong, reiterated his Underweight rating on shares of Deere (NYSE: DE), after DE decided not to provide an outlook on farmer cash receipts as management on its earnings call as management did on the 3Q call last year. This would have offered an initial read into demand expectations for FY17.

Instead, management provided expectations of improving pre-tax income by $500M through FY18, which drove the stock higher even though there is uncertainty as to what would drive the operational improvement. Additional cost savings is expected to be the driver, but the analyst was already modeling over $200M in cost reduction from R&D and SG&A in FY17, and he is now modeling about $250M, driving estimates higher and the price target to $70.

The analyst continues to believe that agriculture machinery sales will decline in FY17 and an elevated used inventory. will cause further declines in the coming year.

The price target of $70.00 is up from $67.00.Deere & Co. (NYSE: DE)

For an analyst ratings summary and ratings history on Deere click here. For more ratings news on Deere click here.

Shares of Deere closed at $87.32 yesterday.

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