Deere’s shares surged 9.9% on Feb. 19 as the manufacturing company posted better-than-expected fiscal first-quarter results. The company’s new operating strategy and a 23% rise in net sales drove the earnings beat.
Deere’s (DE) 1Q earnings more than doubled to $3.87 per share on a year-over-year basis and beat the Street estimates of $2.14 per share. Revenues jumped 19% to $9.1 billion and surpassed the consensus estimate of $7.21 billion.
The company’s net sales from equipment operations came in at $8.1 billion, up 23% year-over-year, driven by improving conditions in the farm and construction sectors.
For fiscal 2021, the company projects net income to be in a range of $4.6 billion to $5 billion. (See Deere stock analysis on TipRanks)
Deere CEO John C. May commented, “As our recent performance shows, these steps are leading to improved efficiencies and helping the company target its resources and investments on areas that have the greatest impact.”
Following the 4Q results, Oppenheimer analyst Kristen Owen reiterated a Buy rating and a price target of $331 on the stock.
“The company saw improved volumes across the portfolio, with favorable mix and strong price realization driving margin expansion in each segment,” Owen commented in a note to investors.
“With the separation of its Ag & Turf portfolio into two distinct segments,” the analyst expects “greater visibility into precision ag uptake and DE’s ability to price for higher tech content, as well as providing a potential roadmap for migration into the Construction portfolio.”
The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 12 analysts suggesting a Buy, 3 analysts recommending a Hold, and 1 analyst suggesting a Sell. The average analyst price target of $319.93 implies 3% downside potential to current levels. Shares have increased 28.6% over the past three months.
Deere scores a 9 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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