Key Points
Higher crop prices are making farms more profitable.
Flush farmers are likely to buy more of Deere's machines.
Shares of Deere (NYSE: DE) rose on Monday after an analyst report drove investors to price in the rising probability of a near-term recovery in the U.S. farming market.
Image source: Getty Images.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
The ag sector is poised for a rebound
A brutal combination of higher fuel costs and lower crop prices has weighed on the U.S. agriculture industry's profits in recent years. Yet farmers could soon get some relief.
Baird analyst Mircea Dobre believes rising corn and soy prices will help to drive an upturn in farming profits in North America, boosting demand for large agricultural equipment in the coming year.
And that, my friends, would mean more sales for Deere.
Deere stands to profit handsomely from a farming recovery
Dobre estimates that Deere's earnings per share will grow to roughly $25 in 2027 and well over $30 in 2028 as these trends take hold. The agricultural machinery and heavy construction equipment maker generated $18.50 in per-share profits in fiscal year 2025.
Due in part to this expected surge in profitability, Dobre placed an outperform rating on Deere's stock and lifted his share price forecast from $640 to $800.
This new price target represents potential gains of more than 22% for investors who buy shares now.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Deere & Company. The Motley Fool has a disclosure policy.