UBS has upgraded its rating on Deere & Co to “Buy” from “Neutral,” saying the worst phase of the farming equipment slowdown may be ending and earnings could start recovering by 2027.
The firm slightly cut its price target for Deere to $535 from $545, reflecting short-term challenges but growing optimism for the company’s long-term outlook.
UBS expects Deere’s earnings for fiscal year 2026 to stay under pressure, with estimated earnings per share dropping to $17.90 from the earlier forecast of $20. The firm believes that the agricultural sector is slowly stabilizing, setting the stage for a rebound in 2027.
By that year, UBS predicts Deere’s earnings per share could climb to $23.20, supported by improving farm incomes, restocking by equipment dealers, and lower interest rates.
The analysts pointed out that North American sales of large tractors have fallen close to historic lows, suggesting that demand has little room to fall further. They expect global sales to start recovering in late 2026 or early 2027.
Commodity prices, especially corn and soybeans, are near multi-year lows, which means there’s room for growth if prices begin to rise again. UBS also mentioned that while retail sales might dip slightly in the short run, the downside appears limited.
Additional support could come from potential U.S. government programs aimed at helping soybean farmers and the return of bonus depreciation policies, which make it easier for farmers to buy equipment.
UBS said its upgrade reflects confidence that, although the near-term outlook may not excite investors, the market will soon start to anticipate a recovery in Deere’s earnings and the broader farm machinery cycle.
