Shares of Deere & Company tumbled 4.95% on Friday, closing at $562.64 and shedding roughly $29.31 per share, as the market weighed the agricultural equipment giant's upcoming fiscal second-quarter earnings report due May 21. The decline outpaced major rivals, with Caterpillar slipping just 0.53% and CNH Industrial falling 2.38%, while the broader Industrial Select Sector SPDR Fund dropped 0.92% and the S&P 500 gained 0.80%.
Analysts currently expect quarterly earnings per share of $5.81, a 12.5% decline from the same period last year, according to Barchart. The anticipated weakness stems from persistently sluggish demand for large-farm machinery, which has weighed on Deere's performance despite signs of recovery in construction and smaller agricultural equipment markets.
Looking ahead to fiscal 2026, Wall Street consensus estimates EPS of $18.01, roughly 2.7% lower than the prior year, with a projected rebound to $23.01 in fiscal 2027. However, these expectations leave little margin for error, as Deere's stock price continues to reflect hopes that steady farm-equipment demand will hold until profits recover.
In February, Deere raised its fiscal 2026 net income outlook to between $4.5 billion and $5.0 billion, and CEO John May characterized 2026 as “the bottom of the current cycle.” First-quarter results showed net income of $656 million, or $2.42 per share, on global sales and revenue of $9.61 billion, up 13% year-over-year. Yet the company also cut factory production in response to softer demand, as noted by Reuters, while Oppenheimer analyst Kristen Owen suggested that depleted inventories could eventually set the stage for gains as supply chains normalize.
The risk environment remains challenging. Deere is bracing for an estimated $1.2 billion pre-tax tariff impact in fiscal 2026, according to Reuters. Meanwhile, the USDA projects U.S. net farm income at $153.4 billion, down 0.7% from the prior year, and with crop prices weak and input costs elevated, farmers may continue to delay purchases of high-ticket equipment like tractors and combines.
Legal headwinds also persist. On April 6, Deere announced a settlement of multidistrict “right to repair” litigation, without admitting wrongdoing, and committed to maintaining access to tools, manuals, and diagnostic software. The deal is subject to court approval. Denver Caldwell, head of aftermarket and customer support, emphasized the company’s dedication to providing repair resources to customers and service shops, as modern equipment increasingly relies on sensors and digital diagnostics tied to dealer networks.
Wall Street remains cautiously optimistic. According to MarketBeat, 16 analysts rate Deere as a Buy, nine as a Hold, with an average price target of $655.45. DA Davidson, Wolfe Research, and Bank of America have all recently raised their targets. If May’s earnings report comes in strong, it could validate management’s view that the cycle has bottomed. However, a disappointing result would likely reignite doubts about whether construction and smaller ag markets can compensate for weak large-farm demand, tariff pressures, and cautious buyer sentiment.
