Deere & Company: Improving Returns/Balance Sheet Strength

Analysts at Citigroup Global Markets maintain their “Buy” rating for Deere & Company (NYSE: DE), while lowering their Earnings estimates. The firm raised their price target to $62 from $52, a premium of over 15% over Friday’s closing price of $52.36.

The Firm Said “With $3.7BB in gross cash at Equipment level (equal to ~16% of current market cap), we see potential for cash deployment catalysts by FY11. Note DE has been out of the market for its stock since ’08 – and currently has $5.6bn left under current authorizations.”

It further added “DE highlighted several cost saving initiatives that should total ~$290MM in FY10, and accelerate further into FY11, offsetting higher pension expense next year.”

However, despite a higher-than-expected earnings base exiting FY09, The firm is lowering their FY10 EPS estimate to $2.60 from $2.80 largely on account of lower volume estimates and higher pension expense and tax rate.

Today, DE made a new 52-week high at $53.82 and now up 1.49% at $53.14.