UBS Raises Price Target on Deere & Co. (DE) to $87 Following 3Q Conference Call
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UBS reiterated a Neutral rating on Deere & Co. (NYSE: DE), and raised the price target to $87.00 (from $80.00), following the company's 3Q release and conference call. Deere & Co.'s CFO claims that the company can improve pre-tax income by at least $500m by the end of 2018 if the downturn in large ag persists at the current levels. The company also noted that short term lease activity was down significantly, and there were no further impairment losses on ST leases.
Analyst Steven Fisher commented, "At the conclusion of the FQ3 conference call, DE's CFO commented that it can improve pre-tax income by at least $500m by the end of 2018 if the downturn in large ag persists at the current levels. In our discussions with IR after the call, DE noted that the $500m would be the result of incremental structural cost reductions (based on a widespread look at the cost structure) over the course of FY17 and 18, and would see benefits over the course of FY17-19.The extent of the benefits are partly dependent on volumes (i.e. further declines in large ag would reduce the amount of near term savings). We calculate that $500m would equate to roughly $1.10/sh if fully realized."
Shares of Deere closed at $87.32 yesterday.
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