NEW YORK (TheStreet) -- "We are upgrading Deere & Co. (DE) to 'neutral' from 'underweight' after the company issued a downbeat FY'15 outlook that may signal trough earnings," JPMorgan analysts wrote today, raising its price target to $90 from $83.
Deere & Co., which operates in three segments, including agriculture and turf, construction and forestry and financial services, reported fourth quarter earnings per share of $1.83 vs. consensus $1.57 and JPM estimates of $1.63, analysts said.
"Management introduced its full year 2015 outlook, expecting equipment sales to be down 15% (implied $28.0B); it is expecting North America industry sales to be down about 25% to 30% in agriculture and turf and up 5% in construction and forestry," analysts added.
Shares of Deere & Co. are up 1.03% to $87.51 in pre-market trading.
Separately, TheStreet Ratings team rates DEERE & CO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate DEERE & CO (DE) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its notable return on equity, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Machinery industry and the overall market, DEERE & CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has slightly increased to $2,843.80 million or 6.64% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -17.32%.
- DE, with its decline in revenue, slightly underperformed the industry average of 2.8%. Since the same quarter one year prior, revenues slightly dropped by 5.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- In its most recent trading session, DE has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- DEERE & CO's earnings per share declined by 13.3% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, DEERE & CO reported lower earnings of $8.62 versus $9.08 in the prior year. For the next year, the market is expecting a contraction of 30.6% in earnings ($5.98 versus $8.62).
- You can view the full analysis from the report here: DE Ratings Report