Why Deere’s Tariff Resilience and Margin Strength Make It a Must-Buy Now

The agricultural machinery giant, Deere & Company (NYSE: DE), has emerged as a beacon of operational discipline in a sector rattled by tariffs and macroeconomic uncertainty. With analysts revising price targets to $560+ and margins holding firm in its crown jewel Production & Precision Agriculture (PP&A) segment, Deere stands out as a rare “buy” in a cyclical industry. Here’s why investors should act now.

The Secret Weapon: A Vertically Integrated Model That Smothers Tariffs

Deere’s vertically integrated supply chain—the envy of its peers—has shielded its PP&A segment from the brunt of tariffs. While rivals face margin erosion due to fragmented sourcing, Deere’s integrated model allows it to control 80% of its tractor components in-house. This structural advantage has kept tariff-related costs in PP&A to a mere $400 million in FY2025, far lower than broader industry estimates. Analysts at Raymond James note this “resilience” is why PP&A margins remain in mid-teens despite headwinds, a stark contrast to Construction & Forestry peers buckling under $500+ million in tariff impacts.

This visual will show DE’s stock hovering near $530 in May 2025, with analyst targets spiking to $560–$620. It underscores the disconnect between near-term volatility and long-term confidence.

Analysts See Through the Tariff Cloud: FY2026 Outlook Is Unmissable

The recent Q2 2025 beat (EPS of $6.64 vs. $5.56 forecasts) wasn’t just about resilience—it was a catalyst for upgrades. Raymond James raised its target to $560, arguing that FY2025’s $400 million tariff hit is a “speed bump,” not a detour. Their FY2026 EPS estimate of $21.80 assumes margin normalization and volume growth across all segments, while Truist Securities went even further, tagging $619 as achievable by leveraging Brazil’s rebound, Western Europe’s infrastructure boom, and Deere’s full PP&A order book through October 2025.

The Strategic Edge: Precision Tech and Geographic Diversification

Deere isn’t just selling tractors—it’s selling data-driven precision agriculture solutions that lock in long-term farmer loyalty. Its John Deere Operations Center and AutoTrac guidance systems are now standard in high-margin equipment, creating recurring software revenue streams. Meanwhile, its geographic mix (40% North America, 30% Latin America/Europe) insulates it from U.S. policy whiplash. Brazil, for instance, is entering a super-cycle of soybean production, driving Deere’s sales there up 15% YoY in Q2.

Near-Term Catalysts: Tariff Transparency and Commodity Tailwinds

• Tariff Clarity: Deere’s Q2 results exposed the full extent of FY2025’s tariff costs, reducing uncertainty. Analysts now see these costs peaking in 2025 and receding in 2026 as trade tensions ease.
• Commodity Pricing: Global grain supply/demand dynamics are tightening, with wheat prices up 20% YTD and corn nearing $6/bushel. This boosts farmer profitability, directly fueling demand for Deere’s high-end machinery.
• Used Equipment Markets: North American used tractor prices are rising 5–7%, signaling strong dealer liquidity—a green light for new sales.

Why Wait? The Risk/Reward Is Lopsided

Deere’s current ratio of 2.11 and 55-year dividend streak (now yielding 1.4%) offer a safety net even if tariffs linger. Meanwhile, legislative tailwinds like the proposed House tax bill—offering full bonus depreciation for equipment buyers—could supercharge demand in 2026. With the stock at $531 (May 16 close) and the analyst median target at $528, the math is clear: the upside outweighs the downside.

Conclusion: Buy DE Now—The Cycle Is Turning

Deere isn’t just surviving tariffs; it’s using them to pull ahead. Its integrated model, precision tech dominance, and global diversification form a moat no peer can match. With analysts’ FY2026 targets hovering near $600 and near-term catalysts aligning, this is a buy at $530+. The farm equipment super-cycle isn’t dead—it’s just waiting for Deere to lead the charge.

Act now before the bulls run.