Deere: Harvesting Greater Earnings and Cash Flow Through Technology Innovation; Valuation Raised

After taking a fresh look at Deere & Co, the global leader in agricultural machinery, we’ve raised our fair value estimate to $501 per share from $355 to reflect our more constructive view on the company’s margin-accretive technological innovations. This will likely allow the firm to achieve target through-cycle margins of 20%, having already demonstrated some 700 basis points of structural improvement versus prior cycles. Furthermore, 2025 likely represents the trough of the agriculture cycle. We’re maintaining our wide economic moat rating as well as our Exemplary Capital Allocation Rating given management’s focus on maintainably higher through-cycle returns. This is in addition to generous shareholder remuneration via its progressive dividend and significant share repurchases.