Shares of Deere were falling 2.1% to $90.25 in early morning trading following the downgrade.
The analyst firm also lowered its price target for the farm machinery company to $84 from $90.
JPMorgan analysts believe the agriculture industry is "currently in dire straits with the potential for a liquidity crunch for farmers into 2016" after spending time talking to dealers, farmers, and industry experts in the Midwest.
The analysts continued, "Additionally, even the dealers acknowledged that there are far too many used high HP Deere tractors in inventory and this is likely to weigh on new tractor sales for the foreseeable future."
Separately, TheStreet Ratings team rates DEERE & CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate DEERE & CO (DE) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and notable return on equity. We feel its 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:
- Net operating cash flow has increased to -$510.10 million or 31.64% when compared to the same quarter last year. In addition, DEERE & CO has also vastly surpassed the industry average cash flow growth rate of -32.24%.
- DE, with its decline in revenue, slightly underperformed the industry average of 10.5%. Since the same quarter one year prior, revenues fell by 16.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness 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.
- The share price of DEERE & CO has not done very well: it is down 5.19% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- DEERE & CO's earnings per share declined by 38.1% 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 37.9% in earnings ($5.35 versus $8.62).
- You can view the full analysis from the report here: DE Ratings Report