Piper Jaffray Remains Sidelined on Deere & Co. (DE) Following EPS Beat - PT to $76
Piper Jaffray reiterated a Neutral rating on Deere & Co. (NYSE: DE), and raised the price target to $76.00 (from $75.00), following the company's 2Q earnings report. DE reported EPS of $1.56 ahead of the Street at $1.48, with strong sales due to timing as revenue shifted into 2Q from both 1Q as well as pulled forward from 3Q.
Analyst Brett Wong commented, "We are adjusting our model following management’s downward revision to guidance, but we continue to expect that the stock will trade at a near-peak multiple due to investor expectations that this year may be the bottom of the ag cycle with a recovery next year. We will not have visibility into a potential supply disruption and in turn grain price appreciation and an improving ag cycle until later in the growing season. Production disruptions in South America have lifted grain prices and additionally supply impacts are expected in the region despite some improved weather, but we still believe a supply disruption in the US in necessary to turn the cycle, granted perhaps now not as prominent given the impacts in South America. We are lowering our earnings expectations this year and in FY17, but our price target moves to $76 on valuation, while we maintain our Neutral rating."
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Shares of Deere closed at $77.74 yesterday.