Deere & Co.: Thesis Unchanged Despite Choppy Markets

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Deere & Co.: Thesis Unchanged Despite Choppy Markets

g Power: Positive

Technology Diffusion: Positive

Source: Refinitiv, Morgan Stanley Research, Morgan Stanley Institutional Equities Division. The probabilities of our Bull,

View descriptions of Risk Rewards Themes here

Base, and Bear case scenarios playing out were estimated with implied volatility data from the options market as of 21

May 2026. All figures are approximate risk-neutral probabilities of the stock reaching beyond the scenario price in either

three-months’ or one-years’ time. View explanation of Options Probabilities methodology here

BULL CASE $900.00 BASE CASE $730.00 BEAR CASE $425.00

~20x Bull Case EPS of $55 discounted back ~20x ~$45 mid-cycle EPS discounted back ~25x Bear Case EPS of $17

today to today

Large Ag sees a more typical downcycle

Ag and construction equipment markets see Ag equipment cycle remains challenged pushing sales of PP&A and SA&T segments

a sharp V-shaped recovery over the next through FY26, and construction equipment lower. Similarly, US construction spending

twelve months as macro conditions improve end-markets similarly remain under pressure disappoints, pushing C&F sales to only grow

and trade/geopolitical risks ease. Earnings near-term. However, the market continues ~LSD% yoy in FY2026. Accordingly, margins

exceeds its normalized earnings at ~$55. The to discount that earnings in FY26 are compress more driving earnings lower yoy in

valuation contracts to ~20x NTM P/E from approaching trough. As such, we assume FY2026. The multiple moves toward to

current elevated levels but remains above that the stock trades on ~20x P/E (NTM) on ~25x P/E (NTM), above its historical trading

the its historical mid-cycle multiple, an implied mid-cycle earnings, roughly in line range of 12x-24x