Morgan Stanley has raised its target price for Deere & Co. (NYSE:DE) to $730 from $560 and left its recommendation at Overweight, reflecting a more favorable near- and medium-term outlook for the farm- and heavy-equipment maker.
The broker adjusted several of its financial assumptions for Deere's fiscal 2026. Morgan Stanley lifted its second-quarter 2026 earnings-per-share estimate to $5.72 from $5.56 and increased its full-year 2026 EPS projection to $17.06 from $16.47. On the operating income front, the firm nudged up its second-quarter 2026 estimate to $1,982 million from $1,974 million and raised the full-year 2026 operating income forecast to $6,155 million from $5,761 million.
The new $730 target is based on an assumed multiple of roughly 20 times applied to a 2030 midcycle EPS estimate of $45, discounted back to present value. Morgan Stanley's prior target used a 17.5 times multiple on an approximate $42.50 midcycle EPS estimate. By contrast, the stock is trading at a trailing price-to-earnings ratio of 37.32. According to InvestingPro Tips, nine analysts have revised their earnings estimates upward for the upcoming period.
Morgan Stanley said the updated forecasts reflect a set of specific changes to its modeling that followed Deere's first-quarter 2026 results. Those changes include revisions to tariff assumptions that influence operating margins across the company's production and precision-agriculture, small and turf, and construction and forestry segments. The firm also incorporated improved top-line and margin guidance for the small and turf and construction and forestry businesses, an updated assessment of currency-translation effects and adjustments to the financial services segment.
Deere reported first-quarter results that exceeded consensus estimates by 20 percent. The company subsequently raised its fiscal 2026 net income guidance by around $375 million, to a range of $4.5 billion to $5.0 billion. Management attributed the upside to stronger-than-expected shipments in the Small Ag & Turf and Construction & Forestry segments.
The quarterly beat and the adjusted outlook prompted several other broker responses. Truist Securities raised its price target to $793 and maintained a Buy rating. RBC Capital increased its target to $736 and kept an Outperform rating. UBS lifted its target to $775, pointing to the quarterly outperformance and positive booking trends as signs that earnings could improve later in 2026. Jefferies, however, downgraded the stock to Underperform from Hold due to valuation concerns even as it set a higher price target of $550. BMO Capital raised its target to $500 while retaining a Market Perform rating and noting improved sentiment in the large agriculture sector.
Taken together, the analyst moves reflect a broadly constructive reassessment of Deere's near-term prospects anchored to the stronger first-quarter results and a mix of tariff, currency and segment-level adjustments in modeling. At the same time, dissenting views on valuation underscore the divergence among analysts over how to price Deere's earnings trajectory against its current market multiple.
Summary - Morgan Stanley raised its Deere price target to $730 and increased EPS and operating income estimates for fiscal 2026, citing Q1 results and adjustments to tariff, currency and segment assumptions. Other firms also lifted targets after Deere beat quarterly estimates, though at least one analyst flagged valuation concerns.
Key points
- Morgan Stanley raised Q2 2026 EPS to $5.72 (from $5.56) and full-year 2026 EPS to $17.06 (from $16.47).
- Operating income forecasts were increased to $1,982 million for Q2 2026 (from $1,974 million) and $6,155 million for full-year 2026 (from $5,761 million).
- Multiple brokerages updated their price targets after Deere's Q1 beat; targets cited include $793 (Truist), $775 (UBS), $736 (RBC), $550 (Jefferies) and $500 (BMO).
Risks and uncertainties
- Valuation pressure - Deere currently trades at a P/E of 37.32, a point Jefferies cited in downgrading the stock despite a higher target; disparity between current multiples and model assumptions could affect returns (affects equity investors).
- Tariff and margin assumptions - Morgan Stanley's forecast changes reflect adjusted tariff assumptions that alter operating margins across multiple segments; shifts in trade policy or input costs could change profitability (impacts equipment manufacturing and margin structure).
- Currency translation effects and financial services adjustments - Updated currency assumptions and changes within the financial services segment were incorporated into forecasts, introducing sensitivity to exchange rates and finance-related earnings (affects multinational revenue translation and captive financing results).