Morgan Stanley Reiterates Underweight Rating on Deere & Company

In a report published Wednesday, Morgan Stanley reiterated its Underweight rating on Deere & Company

. Morgan Stanley noted, “Deere is focused on global agriculture (77% of revenues) which is at risk of a slowdown in mature markets (US, Brazil), while newer markets (India, CIS, China) may prove slow to mechanize and costly to enter. Unexpected drought conditions are always a risk in this industry. Margins are likely to be pressured by unfavorable mix shifts, regulatory spending requirements, higher input costs and geographic expansion. In the event of an economic downturn, Deere's small aftermarket business (14% of revenues) suggests less cushion than our other names that have as high as a 60% mix.” Deere & Company closed on Tuesday at $79.76.