Baird downgrades Deere to Neutral amid uncertainty from agriculture sector

Investing.com -- Baird downgraded Deere&Co (NYSE: DE) to Neutral, now viewing a more balanced risk/reward outlook after recent stock gains and a lingering uncertainty over a cyclical recovery in the agriculture sector.

The firm noted that while Deere has been proactive in managing dealer inventories and is positioned for earnings growth into 2026, further upside may be limited given its near-record valuation.

“Stock near all-time highs and valuation rightfully near all-time highs, 27 times EPS, reflecting both sizable cyclical demand compression and excellent trough margin execution, further upside will increasingly be reliant on more meaningful cyclical reacceleration,” analyst at Baird said.

Baird also moved CNH Industrial (NYSE: CNH) and AGCO Corp to Neutral, highlighting weak commodity prices, policy uncertainty, and potential cost pressures from tariffs and steel prices as challenges for the sector.

While CNH could see near-term upside with further multiple expansion, AGCO faces higher risk due to slower inventory destocking and weaker North American tractor demand.

The firm believes the first half of 2025 will mark the bottom for agricultural production but warns that visibility on a broader recovery remains low.

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