Shares of Deere & Co. (DE) were slightly lower in Monday afternoon trading, down 1.46% to $102.40, as its monthlong rally finally lost a bit of steam.
Jefferies thinks that Deere is heading for a fall, but now has a more optimistic view of where the heavy machinery company will ultimately end up. The investment bank bumped up its price target on the stock to $95 from $85 in a note circulated to investors Monday.
Deere has been swept up in the buying craze for stocks even vaguely related to infrastructure after Donald Trump's surprise victory in the Presidential election earlier in the month. Investors have been flocking to stocks like Deere and Caterpillar (CAT) in hopes that Trump will deliver on his campaign promise to invest $1 trillion in U.S. infrastructure over the next decade.
It's easy to draw a straight line between Trump's policy platform and a company like Caterpillar that makes construction equipment. Tying Deere - which makes about three-quarters of its sales in agricultural equipment like tractors - to Trump may be a bit more of a stretch. The company is much more exposed to crop commodity prices than it is to spending on highways and bridges.
Deere itself is speaking in reserved tones about its projected performance in the 2017 fiscal year. The company said in its 2016 fourth quarter earnings release on Nov. 23 that it expects U.S. and Canada agricultural equipment sales to drop between 5 and 10% in FY 2017, citing weak farm incomes and commodity prices. It expects net equipment sales to drop 1%.