Deere Stock Downgraded Ahead of Earnings

J.P. Morgan sees "rapidly deteoriating fundamentals" for U.S. agriculture

by Karee Venema

Published on May 14, 2019 at 10:00 AM
Updated on May 14, 2019 at 10:16 AM

J.P. Morgan Securities downgraded Deere & Company (NYSE:DE) stock to "underweight" from "neutral," and slashed its price target to $132 from $154. The brokerage firm cited "rapidly deteriorating fundamentals" in U.S. agriculture, due to "tariffs and excess global supply," declining Chinese demand for soybeans amid an African swine fever outbreak, and a strengthening greenback.

Nevertheless, DE stock is up 0.8% to trade at $147.45. The upside comes following a period of weak price action for the farming equipment maker, with the shares off 13.3% from their April 18 14-month peak at $169.99. Plus, during yesterday's bashing -- which saw Deere plunge 6.3% on news of China's retaliatory tariffs -- the equity closed below its 200-day moving average for the first time since Jan. 3, sending its 14-day Relative Strength Index (RSI) to 27, in oversold territory.

This volatility could continue into week's end, with Deere set to report earnings before the market opens this Friday, May 17. The stock has closed higher in the session in six of the last eight quarters, but fell 2.1% after earnings in February. On average, the shares have moved 3.9% the day after earnings in the last two years, with the options market pricing in an 8.6% move for Friday's trading.

A number of options traders are expecting Deere to rally over the next several weeks. The June 175 call is home to peak open interest of 9,544 contracts, and data from Trade-Alert points to mostly buy-to-open activity here. If this is the case, call buyers are targeting a breakout above $175 by the close on Friday, June 21, when the options expire.


a schaeffer's exclusive

PLAY TRENDS LIKE A PRO!

5 tips to leverage profits in this FREE insider report!


 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


The Trend Minting Millionaires -- But Who Is Really Paying?
Porter Stansberry is making a concerning prediction.
Roller Coaster Week Defined by Trade Headlines, Jobs Report
The Dow made outsized moves in both directions this week
Needham is Buying Trade Desk Ahead of the 2020 Election
Trade Desk stock has more than doubled in 2019
The Trend Minting Millionaires -- But Who Is Really Paying?
Porter Stansberry is making a concerning prediction.