UPDATE: Bank of America Lowers PO on Deere on Potential Hard Landing

In a report published on Wednesday, Bank of America analyst Ross Gilardi lowered the price objective on Deere DE from $102 to $95 and reiterated a Buy rating on the company.

In the report, Bank of America commented, "We reiterate our Buy rating on Deere despite lower estimates into FY14-15. We see a fairly muted 5-10% decline in total US farm cash receipts next year leading to a relatively soft EPS landing for Deere in 2014, vastly different than what we have seen in mining equipment. DE and CAT have historically traded at parity, but Deere now trades at a 15-20% discount to CAT on 12-month consensus fwd P/E." Bank of America als went on to say, "We reduce FY14-15 EPS 12-15% to $7.80/$8.45 assuming a 9% decline in global Ag & Turf sales in 2014 and 21% overall decremental margin (similar to ‘09). Russian combine duties, Section 179 expiration, direction of Brazilian FINAME financing rates, used combines, Final Tier 4 execution remain risks, but a better than expected outcome on any could help sentiment. We lower our DCF-derived PO to $95 from $102, implying 12.2x 2014E EPS, 14% below DE's historical 14- 15x average."

Deere closed on Tuesday $83.96