John Deere has reported significant hits from weaker agricultural demand, but Wall Street still sees optimism for the company's road ahead.
John Deere is positioning itself in what's been a struggling broader agricultural sector, citing weaker demand and taking significant losses in sales.Still, Deere and Wall Street analysts remain optimistic that the company is hitting a bottom this year and will turn around in the longer term.
Attendees view a John Deere 7R 270 row crop tractor at the Deere & Co. booth during the World Ag Expo at the International Agri-Center in Tulare, California on February 11, 2025.is facing a crossroads as the company continues to see weaker demand in the agricultural sector even while it has committed to investing millions in U.S. manufacturing and promised a brighter road ahead.on its fiscal third-quarter earnings call last week that it is seeing much softer demand, posting significant year-over-year decreases in net income and sales. The company is working to position itself in the larger agricultural sector, which has seen growing challenges with rising costs, climate change impacts, labor shortages and more. Farmers have also been dealing with lower prices on crops like corn and grain and have pared back their spending as a result. In turn, Deere's target audience has pulled back on its willingness to buy new agricultural equipment. Deere has also been hit by tariff costs, estimating that it could take a $600 million hit for the fiscal 2025 year. The company has already seen $300 million in tariff expenses year-to-date. Just after reporting its earnings, the company confirmed to CNBC that it announced 238 layoffs across its Illinois and Iowa factories, adding to thousands who have been laid off over the past year. The company cited decreased demand and lower order volumes as the main factors behind the job reductions. "As stated on our most recent earnings call, the struggling ag economy continues to impact orders for John Deere equipment," Deere told CNBC in a statement. "This is a challenging time for many farmers, growers and producers, and directly impacts our business in the near term."Still, Deere has identified enough green shoots to point to a less troubling future. On its most recent earnings call, company executives emphasized the growth in demand in both Europe and South America after seeing weakness in North America. Despite macroeconomic headwinds, Deere's president of its worldwide agriculture and turf division said the company remains confident in its future. "We think there's positive tailwinds from both what we see in the trade deals, and we think there are positive tailwinds from what we see in tax policy," Reed said on the call. And in June, the company released a statement that "myth-busted" any claims that Deere might need to shut down its U.S. manufacturing due to the fall in demand. Instead, the company said it was making a "bold move" to invest $20 billion into U.S. manufacturing over the next 10 years. "Over the next decade, we will continue to make significant investments in our core U.S. market," CEO John May said in aDespite the struggles in the broader agricultural sector, Wall Street analysts on the whole remain optimistic about Deere's road ahead.Even Truist analyst Jamie Cook, who lowered his target after Deere's earnings last week and emphasized an uncertain outlook for 2026, said he still believes this year marks a bottoming for the company's earnings per share.Looking at Deere's history and the hit that the farming industry has taken over the past few years, D.A. Davidson analyst Michael Shlisky told CNBC he can't imagine the company going much lower from here. "The way I'd say it is 2025 could be the worst, the lowest number of tractor sales in the history of modern agriculture," he said, with the potential for the trend to swing upward becoming imminent. While the optimism might not be directly translating to sales today, Shlisky said the "hints" of progress are enough to make him excited about the company's future, including the growth in Europe and South America. "When parts of the world are doing better, the parts that aren't doing as well are likely to follow," Shlisky said. While not commenting directly on the latest round of layoffs, Shlisky said he doesn't think investors would be surprised to see the necessary cost-cutting measures at this point in the company's trajectory. Similarly, Morgan Stanley analysts wrote in a note that while demand may be decreasing, they stand behind a thesis that Deere earnings have bottomed and that the company remains an "attractive opportunity longer term." Analyst Angel Castillo told CNBC that Deere and the agricultural sector at large are cyclical, so while the short-term remains uncertain, the long-term outlook for the company is likely to bounce back, noting that precision agriculture in particular is likely to take off. "This is one of the unique areas where we think even if there's more challenges next year, as we kind of expect, the earnings downside risk is much more de-risked or already captured by expectation," Castillo said. With its latest cost-cutting measures, Deere is saving itself by not overproducing or creating a supply chain issue, Castillo added. "The reality today is that we're still in an uncertain environment, and I think they're managing in a disciplined, rational way to try to make sure not to create a worse environment," he said.
United States Breaking News: Business Transportation Deere & Co Donald J. Trump Donald Trump Business News
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
John Deere is investing $20B in the US, and here are the detailsJohn Deere plans a $20 billion investment in the U.S. over the next 10 years, emphasizing advanced manufacturing, innovative technologies and product development.
Read more »
How Chipotle became a Wall Street star, and a 'Wall of Shame' employerBusiness Insider tells the global tech, finance, stock market, media, economy, lifestyle, real estate, AI and innovative stories you want to know.
Read more »
BNB Chain bridges Wall Street and Main Street for the next phase of crypto adoptionMajor technical upgrades on BNB Chain halve block times, optimizing the network for financial-scale use cases like global remittance
Read more »
John Deere forecasts $600 million in tariff impacts this yearJohn Deere beat on the top and bottom lines Thursday but said that the company is taking a large hit from tariffs.
Read more »
Best Stocks: Earnings are booming at this company taking market share in a niche software spaceJosh and Sean break down a software firm behind John Deere tractors and Bose audio systems.
Read more »
John Deere Hit With Layoffs Amidst Trump’s Idiotic TariffsThe tractor company has said tariffs are contributing to an uncertain climate for its buyers.
Read more »