Deere & Co. "Takeaways from Midwest farm and dealer visits" (Buy) Fisher

Research evidence excerpt

Deere & Co. "Takeaways from Midwest farm and dealer visits" (Buy) Fisher

ently not enough inventory to meet potential UBS Cons.

demand. Q1E 2.42 2.42

Q2E 5.46 5.70

Our interpretation: Q3E 4.96 5.10

We got some reassurance that 2026 should be the bottom of the earnings cycle, Q4E 4.72 4.64

as important elements of inventory seem to be in a better place, and we heard the 10/26E 17.55 17.91

10/27E 25.40 22.94

message that we’re getting closer to the usual time when replacement should start

10/28E 28.30 29.06

to pick up. We think the setup for early orders is better than last year.

Steven Fisher, CFA

However, should current conditions persist, the replacement cycle could start at a

Analyst

more gradual pace relative to what we currently expect. Still, a lot could change steven.fisher@ubs.com

over the next few months, and potential for lower corn yields along with lower +1-212-713 8634

inventories could be the foundation for the start of the next machinery upcycle.

Avinatan Jaroslawicz

The risk is that the uncertainty could push out the recovery to some extent.

In light of higher fertilizer prices, while it’s too soon to adjust any estimates, we avinatan.jaroslawicz@ubs.com

+1-212-713 1405 think it’s worth sensitizing. We forecast 15% revenue growth next year in Deere's

large ag business (cons +12%), and calculate that every ~5% trim would be ~ Judah Aronovitz

$0.75-$1.00 to earnings and ~3-5% to the stock at the current multiple. However, Associate Analyst

there’s still an upside case because corn price could still rise in the next few judah.aronovitz@ubs.com

+1-212-713-4881

months, given some potential risks to yields.

With a 12 month view, we maintain our Buy rating on Deere. Our meetings

Highlights (US$m) 10/23 10/24 10/25 10/26E 10/27E 10/28E 10/29E 10/30E