Deere (DE) posted "solid" fiscal Q4 results and issued its outlook for fiscal 2026, outlining plans to navigate tariff pressures and prepare for a possible rebound in agriculture markets next year, RBC Capital Markets said.
The company's full-year profit forecast came in below analysts' estimates due to roughly $1.2 billion in "pre-tax tariff impact," but RBC said Deere continues to make solid progress on inventories and reported strong equipment operations performance, with net sales rising about 14% year over year, including a 26.9% increase in Construction and Forestry.
Deere's initial fiscal 2026 guidance calls for equipment operations net sales growth of 1% to 3% and operating margins of 11% to 13% in Production & Precision Ag. The company expects net income of $4 billion to $4.75 billion and projects about $830 million in earnings from its financial services unit, according to the note Wednesday.
RBC said Deere is positioning for a potential "inflection" in agriculture fundamentals in fiscal 2026, pointing to supportive trends such as strong global crop consumption, improving yields in Europe, and steady biofuel-related demand, trade flows, and government support.
The firm reiterated its outperform rating on Deere and trimmed its price target to $541 from $542, saying the company's precision ag ecosystem remains a key competitive differentiator that supports its through-cycle strategy.
Price: 470.81, Change: +0.94, Percent Change: +0.20
Comments