Deere & Co. Shares Drop Amid Analyst Downgrade and Tariffs

Deere & Co. shares fell 3.9% as investor sentiment was hit by a downgrade and new tariffs. Analysts express concerns over limited upside potential as weak commodity prices and geopolitical tensions loom.

Date: 04-03-2025

AI Rating: 4

Deere & Co. (NYSE: DE) is facing considerable headwinds that could impact stock prices negatively. The recent downgrade from R. W. Baird, reducing their rating from outperform to neutral, is a significant indicator that investor confidence is shaken. This downgrade, coupled with a limited upside potential of only 8% from the current price, raises concerns about the stock’s future performance.

Sales and Net Income Concerns
Deere reported a substantial 30% year-over-year decline in sales and a 50% drop in net income for the first quarter. Such results could result in negative market sentiments as they portray a struggling business environment. Despite the company’s guidance projecting a net income ranging from $5 billion to $5.5 billion in 2025, this still represents a drop of nearly 22% from 2024’s figures, even at the highest estimate. Investors could view this as failure to meet performance expectations.

Impact of Tariffs
The announcement of tariffs by President Trump on external agricultural products, effective April 2, poses a significant threat to Deere’s earnings. With China being the largest importer of U.S. agricultural products, the retaliatory tariffs from Beijing could exacerbate sales decline. Given that about 34% of Deere’s total sales and revenue come from outside the U.S. and Canada, these tariffs could severely hinder growth prospects and profitability.

Market Reactions
Overall, market reactions to the combination of an analyst downgrade, declining sales, and an uncertain regulatory environment indicate that investors should exercise caution with Deere’s stock. With tariffs and geopolitical tensions brewing alongside declining sales metrics, it could signal a challenging period ahead for the company.

Stocks: DE