Analyst Sees Better Days Ahead For Deere Stock

Jefferies took its price target to record-high territory

by Patrick Martin

Published on Jun 24, 2019 at 9:17 AM

The shares of Deere & Company (NYSE:DE) are up 1.2% in electronic trading this morning, after a big upgrade from Jefferies. The brokerage firm raised its rating on Deere stock to "buy" from "hold," while goosing its price target up to $190 from $150, record-high territory. The analyst in coverage sees higher prices and incomes on the horizon now, thanks to the new farm cycle on deck after a 5-year period of oversupply. Jefferies did also warn that weather and volume issues could serve as near-term headwinds, though. 

After flirting with the $170 level in late April, Deere stock spent the next month reeling from a combination of trade headwinds and post-earnings bear gaps. But since a year-to-date bottom near $132 on May 20, DE has turned in only six negative sessions on its way to five weekly wins. And thanks to today's price action, the shares have now filled the May 6 bear gap that started the freefall.  

For such a volatile stock, it's no surprise that the analyst sentiment is rather mixed. Of the 15 brokerages covering DE, six rate it a "hold" or "strong sell." Plus, the consensus 12-month price target of $163.89 is a discount to Friday's closing perch of $164.28. There's more pessimism elsewhere; short seller ranks have swelled by almost 30% in the two most recent reporting periods, and accounts for four times the average daily trading volume.

Data does suggest it's a good time to speculate on Deere. The equity currently boasts a Schaeffer's Volatility Index (SVI) of 23%, which ranks in the 12th annual percentile, showing relatively muted option premiums at the moment.

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