Deere (DE) Cycle Running Longer than Expected - Oppenheimer
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Oppenheimer analyst Kristen Owen reiterated an Outperform rating and $416.00 price target on Deere (NYSE: DE) after meeting with management and learning that management sees a number of factors extending the cycle beyond the current year: tight new and used dealer inventory levels, robust order books, and supply chain dynamics limiting over production/inventory-rebuild. Additionally, commodities prices remain favorable for investment, while last year's COVID-19 payments shored up farm balance sheets. Given the oldest fleet on record, replacement demand is seen driving a prolonged cycle.
The analyst stated "we view production constraints extending demand well into FY2022. We see DE's aftermarket and retrofit business benefiting from tight channel inventories, providing an opportunity for the company to bring a new generation of customers into the technology ecosystem. For C+F we see the proposed infrastructure bill providing option value and potential for margin acceleration and technology migration."
Shares of Deere closed at $379.00 yesterday.
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