Deere & Co.: F2Q26 Beat and FY26 Guide

Research evidence excerpt

Deere & Co.: F2Q26 Beat and FY26 Guide

UpdateMto be expected given ongoing macro uncertainty and potential risks related

to the Iran/US conflict. That said, we think the lowered price outlooks for

both PPA and SAT segments along with an implied F2H below consensus

may weigh on sentiment, pending management commentary as to the degree

of conservatism embedded in the guide.

• (=/-) Ag & Turf segments' sales and margin outlooks were unchanged:

Both Production & Precision Ag and Small Ag & Turf segment sales and

margin outlooks were unchanged. But notably, the company lowered its

price realization outlooks for both segments with PPA being lowered to

roughly +1% (~1.5% previously) and SAT lowered to roughly +1.5% (~+2.0%

previously).

• (-) Ag Industry Regional Outlook largely unchanged with the exception of

South America, which was lowered. DE now expects down ~15% versus

down ~5% previously. The magnitude of this cut is bigger than we

anticipated and worse than that telegraphed by peers.

• Outstanding Questions / Our Focus on Conf Call:

° Investor focus will be on the impact of the Iran conflict on operating

costs and equipment demand as a result of weaker farmer economics.

° Investors will also focus on US Section 232 Steel tariffs and implications

for NA input costs and margins

° Global Ag Cycle commentary as investors parse through signs of

stabilization versus further downside risk

° Pricing outlook across segments will also be in focus, with investors

most cautious on Ag and likely most optimistic on Construction

• Read-throughs:

° Negative read-through for Ag peers (CNH/AGCO) given the bigger cut to

South America industry outlook than peers had telegraphed as well as

DE's price realization outlook cuts, which will weigh on sentiment for the