Analyst Note| Dawit Woldemariam |
Agco reported second-quarter results that were above our expectations, leading us to raise our fair value estimate to $116 from $110. The changes to our valuation were primarily focused on near-term revenue, as Agco posted strong top-line growth in the quarter, up 43% year on year. We now expect sales to reach close to $11.4 billion (24% growth in 2021), which is at the midpoint of management’s guidance ($11.3 billion to $11.5 billion). The company saw strong growth across its regions globally, with South America up the highest. The region surged 53% compared with the prior-year quarter on stronger demand for agricultural equipment in Brazil (up over 65% year on year).