Investing.com -- Jefferies upgraded Deere & Company to Hold from Underperform, saying the stock’s recent pullback has made its risk-reward more balanced.

The move comes after shares of the farm equipment maker have fallen roughly 15% from their mid-February highs, bringing the stock closer to Jefferies’ unchanged price target of $550.

"The shares are nearing our unchanged $550 PT, and we believe additional downside risk is limited following the recent pullback," analyst Stephen Volkmann said in a Tuesday note.

He described Deere as one of its highest-quality companies, pointing to the strength of its product innovation, significant market penetration, and a large proprietary agricultural data lake with 500 million engaged acres in the John Deere Operations Center.

Volkmann expects record earnings at the next cycle peak, forecasting revenues to grow 75% from the 2026 trough, driven by 65% volume growth and 10% from pricing, with incremental margins of 35%. Applying a peak multiple of 15 times earnings and discounting back to 2026 yields their $550 price target.

Despite the upgrade, Jefferies kept its macro thesis unchanged, projecting a prolonged trough through 2026. February marked the 30th month of negative high-horsepower equipment sales in North America, with volumes down more than 40% since the 2023 peak.

Production and Precision Agriculture volumes are expected to fall another 10–15% in fiscal 2026. For context, the prior downcycle from 2014 to 2017 lasted 43 months and saw volumes drop roughly 55%.

Farmer economics remain a key concern, with the USDA projecting farm income levels to decline about 15% in 2026. "Increased input costs, trade volatility and elevated debt/asset ratios are headwinds to significant equipment purchases and suggest a more gradual recovery," Volkmann said.

He also noted that a continued conflict in Iran could push fertilizer prices higher and lift fuel costs, potentially boosting biofuel demand and improving commodity crop prices over the longer term, though any such benefit to farmer income is unlikely to materialize in the near term.