Deere (DE) Drops on Big EPS Miss and 'Light' Guidance, Analyst Reactions Mixed

August 19, 2022 7:58 AM EDT
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Price: $345.90 +3.04%

Rating Summary:
    19 Buy, 15 Hold, 4 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 11 | Down: 15 | New: 37
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Shares of Deere (NYSE: DE) are down over 5% after the company reported FQ3 results and updated its full-year forecast.

For the full year, Deere said it sees net income between $7.0 billion and $7.2 billion, which is worse than the prior guidance of $7 billion to $7.4 billion. Analysts were looking for net income of $7.13 billion.

Deere reported EPS of $6.16 on revenue of $13 billion, which compares to the analyst consensus of $6.64 on revenue of $12.95 billion.

Reflecting on the lower-than-expected EPS, the company said the results mirror higher costs and production inefficiencies. The supply chain situation is still described as “difficult.”

Goldman Sachs analyst Jerry Revich reaffirmed a Buy rating on the DE stock “given accelerating precision ag adoption and ag machinery share of farmer capex that is approaching normalized levels this year following an extended capital stock reduction cycle.”

Cowen analyst Matt Elkott said DE delivered “mixed” results while the updated outlook is seen as “light.”

“Based on what we believe was decidedly improving sentiment from both the buy side and sell side leading up to the results, anything short of a near-banner quarter could lead to pressure on shares, and this is not a near-banner quarter,” Elkott said in a client note.

By Senad Karaahmetovic

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Goldman Sachs, Cowen & Co, Senad Karaahmetovic