Is Now the Time to Buy Deere Stock?

Deere & Co. (NYSE: DE) delivered a fiscal first-quarter earnings report that, while slightly exceeding expectations, still reflected significant headwinds for the agricultural equipment giant. Despite a better-than-feared result, the company’s cautious outlook and persistent macroeconomic challenges led to a selloff in the stock. However, with some analysts raising price targets and favorable developments on the tariff front, investors are questioning whether the worst is behind Deere and if now is the right time to step in.

Recent Price Action: Mixed Reactions and Volatility

Following its earnings release, Deere stock initially slumped by 4.5% before recovering some ground. On Thursday, shares fell 2.2% before rebounding 3% on Friday, closing at $480.22. The stock is up about $4 from pre-earnings levels despite the volatile swings. The broader market reaction was muted, with the S&P 500 flat and the Dow down 0.4% on Friday.

Analysts and investors appear divided on the next move. Some view the post-earnings weakness as a necessary adjustment to tempered expectations, while others see value in buying a cyclical stock that may be bottoming out in earnings.

Earnings and Guidance: Finding the Trough?

Deere posted EPS of $3.19, surpassing the $3.11 consensus estimate, but well below the $6.23 earned in the prior-year quarter. Revenue came in at $8.51 billion, down 30% year-over-year and missing Wall Street expectations of $7.89 billion.

While disappointing, Citi analyst Kyle Menges sees fiscal 2025 as the likely earnings trough for Deere. He raised his price target from $430 to $480, citing inventory reductions and improving sales dynamics heading into fiscal 2026. The broader analyst community remains mixed, with 48% of analysts rating the stock a Buy—below the S&P 500 average Buy-rating ratio of 55%. The consensus price target sits around $487.

Key Catalysts: Tariffs, Inventories, and Farm Income

One key development that helped support Deere stock was the company’s assurance that recently enacted tariffs on China would have minimal impact on its operations. CFO Brian Ducey stated that China tariffs on U.S. farm machinery were "immaterial," with less than 2% of the company's U.S. manufacturing costs coming from China. This alleviated concerns that trade tensions could further dent margins.

On the inventory front, Deere has been “underproducing” to bring down dealer inventories to normal levels. The company noted that this effort is beginning to yield positive results, removing a key overhang that has pressured sales.

Moreover, the U.S. Department of Agriculture projects farm income will rise to $194 billion in 2025 from $163 billion in 2024. This potential recovery could provide a much-needed boost to equipment sales, particularly as farmers look to replace aging machinery in an eventual upcycle.

Valuation and Investment Case

Deere stock currently trades at approximately 23 times estimated fiscal 2025 earnings. While this may seem high, cyclical stocks often trade at elevated multiples at earnings troughs. For context, Deere traded at just 10 times earnings during its peak-profit year in 2023.

Given the potential for improving fundamentals in 2026, some investors are willing to pay a premium for earnings recovery. The stock has also outperformed the S&P 500 over the past year, up 24.8% versus the index’s 22.3% gain.

Conclusion: Should Investors Buy Now?

While Deere’s fiscal Q1 results were weak, some signs point to stabilization. The company is actively managing inventories, macro conditions could improve with rising farm income, and analysts believe earnings may have reached a bottom. Moreover, concerns over tariffs have been largely dismissed, reducing a key risk factor.

For long-term investors willing to withstand potential near-term volatility, Deere may present an attractive buying opportunity. However, given the uncertain demand outlook and still-high valuations, cautious investors may prefer to wait for clearer signs of an earnings turnaround before committing heavily to the stock.