Market Overview

Deere's Vision Dependent On Cloud Platform And Retrofitting

Deere's Vision Dependent On Cloud Platform And Retrofitting

UBS’ Steven Fisher believes building a cloud-based platform and retrofitting equipment are key to the vision of Deere & Company (NYSE: DE).

Fisher maintains a Neutral rating on the company with a price target of $87.

Precision Ag Business

At its investor meeting on August 29, Deere “highlighted elements of its precision ag business, including precision planters, machine and agronomic data that allow for better farmer decision making, and a tech platform featuring apps to support farmer tasks,” the analyst mentioned.

The company elaborated that it plans to make money through subscription services, retrofitting older machines for technology and collaborating with data analytics and other service providers.

Related Link: Argus Elevates Deere Price Target To $98, Expecting Margins To Rebound

“DE was clear that it not only targets equipment market share through its technology, but also targets revenues from technology itself,” according to the UBS report.

Cost Savings

The company also clarified its target of $500 million through structural cost savings would come from SG&A, R&D and production costs.

However, Fisher pointed out that if “large ag declines double digits again, cost reductions wouldn't support steady decremental margins, but incrementals would be better in an upcycle as well.”

On the other hand, early order program indications were still too limited to provide more clarity, while the signs were not positive in Europe at present.

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Latest Ratings for DE

Aug 2019ReiteratesBuy
Aug 2019MaintainsOverweight
Aug 2019ReiteratesOutperform

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