Analyst Note| Dawit Woldemariam |
Wide-moat-rated Deere held its analyst day on May 26, where it walked through its strategy around precision agriculture and sustainability. Following the event, our $294 fair value estimate remains unchanged. During the company’s fiscal first-quarter earnings call, management announced its 2030 profitability target, which calls for operating margins (in equipment operations) to reach approximately 20% through the economic cycle. Prior to that announcement, Deere had been targeting 15% midcycle operating margins. In our view, Deere is adept at developing and delivering innovative products to its customers, but we believe it will take some time for digital adoption rates to reach critical scale.