Shares of Deere & Co. appreciated 4.4% on Friday after the farm and construction equipment manufacturer reported better-than-expected 3Q results and raised its profit outlook for fiscal 2020.
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Deere’s (DE) 3Q revenues of $8.93 billion surpassed analysts’ expectations of $6.7 billion. The company’s earnings of $2.57 also beat Street estimates of $1.26. However, top and bottom-line results declined by 11% and 8.5%, respectively, on a year-over-year basis.
Looking ahead, Deere now anticipates the rate of decline in agricultural and construction sales to be more modest than it had forecast during 2Q results. As a result, the company increased its net income guidance for fiscal 2020. The company now projects a profit of $2.25 billion, up from the previous guidance range of $1.6-$2 billion. (See DE stock analysis on TipRanks).
Ahead of the earnings, BMO Capital analyst Joel Tiss on Aug. 17 lifted the stock’s price target to $235 (17.8% upside potential) from $150. Tiss stated that demand across Deere’s end markets are expected to be “better than feared” despite the headwinds, which includes low grain prices and trade disputes.
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 9 Buys, 4 Holds and 1 Sell. The average price target of $189.38 implies downside potential of about 5.1%. Shares are up 15% year-to-date.
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