- Deere (DE +0.8%) adds to Friday's 13.5% surge that followed its strong FQ3 earnings beat, but analysts differ on whether the stock has come too far too fast.
- Citi raises its FY 2016 and 2017 estimates for DE, citing the better than expected Q3 report and plans for more structural cost reductions, and hikes its stock price target to $100 from $87 with a Buy rating, arguing that equipment has been one of the few spots in the broader agriculture space that is not experiencing price deflation.
- BMO analysts note that DE’s diluted shares outstanding have fallen to ~316M from 429M in FY 2010 and that DE is underproducing retail demand by 15%-20% in its ag equipment business, providing "powerful levers that the company has to drive EPS above prior trough levels."
- However, Morgan Stanley retains its Underweight rating and $76 price target, saying the stock now reflects the $500M DE expects in cost savings by FY 2018 and warns that the company may not realize the full $500M in savings if its revenues are lower than in FY 2016 or if some of its costs rise.