Baird Upgrades Deere (DE) to Outperform on Hopes of Recovery

Baird Upgrades Deere (DE) to Outperform on Hopes of Recovery

Thu, September 3, 2026 at 12:47 AM GMT+3 3 min read

• DE -0.57%

Deere & Company (NYSE:DE) seems to have attracted renewed attention from analysts after an impressive rise in its stock so far this year. As of August 31, the stock gained more than 35%. On August 31, Baird upgraded its rating on Deere & Company (NYSE:DE) from Neutral to Outperform and lifted its price target from $640 to $800.

Bull Case

Baird sees a favorable setup for Deere & Company (NYSE:DE) because of its high exposure to North American row-crop equipment demand. The research firm expects the company to be among the first agricultural equipment companies to benefit when investors see a recovery in the agricultural sector.

The firm also noted that commentary on early order programs indicated that orders for planters and sprayers were up by a mid-single-digit percentage compared with last year's completed program. Baird believes that this suggests early order programs could end up higher by completion and this also provides early signs of a possible recovery in production and precision agriculture.

According to Baird, the current early order programs could be significantly underestimating the actual demand potential for production and precision agriculture in 2027 if its assessment of corn and soybean fundamentals proves correct. The firm noted that the potential recovery should continue into 2028.

Based on this outlook, Baird believes that Deere & Company's (NYSE:DE) earnings power could be nearing $25 per share in 2027 and in the mid-$30s per share in 2028 as the North American agricultural cycle recovers.

Bear Case

Deere & Company's (NYSE:DE) management has said that the overall market conditions remain challenging. Farm income remains under pressure and farmers continue to deal with uncertainty over input costs and crop demand.

Higher input expenses, commodity price volatility, and uncertainty around trade flows have kept producers cautious about capital spending.

During its recent earnings call for the third quarter ended August 2, 2026, Deere & Company (NYSE:DE) maintained a challenging outlook for the agricultural equipment industry. The company expects industry sales of large agricultural equipment in the US and Canada to decline 15% to 20% year-over-year as producers continue to navigate muted farm profitability and elevated input costs. Deere & Company (NYSE:DE) expects the Small Ag and Turf industry in the US and Canada to remain relatively stable, with sales forecast to be flat to up 5%.

Tariffs are also adding pressure on the company's outlook. The company expects to pay about $1.1 billion in direct tariffs this year, offset by $382 million in refunds, leaving net tariff exposure of approximately $750 million. Deere & Company (NYSE:DE) expects its tariff expense to be around $1 billion next year, creating an additional cost pressure compared with this year.

What the Numbers Say

Hedge fund interest in Deere & Company (NYSE:DE) has also weakened recently. According to Insider Monkey's database, 59 hedge funds held positions in the stock in the second quarter of 2026, down from 62 funds in the first quarter.

As of August 14, 1.88% of the company's float was sold short. Deere & Company (NYSE:DE) trades at 26.67 times forward earnings. This presents a mixed picture for investors. While some analysts have turned more positive on the stock, its upside appears to depend largely on a recovery in North American agricultural demand. Weak farm profitability, cautious equipment spending, and rising tariff costs are still key risks to the company's near-term outlook.

While we acknowledge the potential of DE as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on thebest short-term AI stock.READ NEXT: Rosenblatt Sees Booking (BKNG) as the Best-Positioned Online Travel Agency Despite Challenges and Comstock Resources (CRK) Bags $2.1B New Deals, Climbs 11%.Disclosure: None. Follow Insider Monkey on Google News.