The firm also raised its price target to $190 from $150, representing a potential upside of 16% from the stock's closing price Friday of $164.28.
In trading Monday, Deere was trading at $165.48, up 0.73%.
"Weather challenges in the U.S. and abroad coupled with increased demand look to fundamentally drive better balance in global crop and livestock markets, with higher prices for the next several years," analyst Stephen Volkmann wrote. "Against this backdrop we expect a replacement and upgrade cycle for farm equipment, both in the U.S. and abroad. DE is the largest and highest quality play on this theme, and appears to have the most integrated advanced farming technology platform as well."
Volkmann does see some near-term struggles in agriculture fundamentals that will limit farmer buying power, but he expects farmer income to improve in 2020.
"The company has taken several steps over the last downturn to reduce costs and improve manufacturing operations. We believe the improved cost structure should result in incremental margins north of 25% as volumes return in 2020. Correspondingly a higher mix of large ag products should add to incrementals which we are now projecting to be just under 30% for next year," Volkmann wrote.