J.P. Morgan analyst Tami Zakaria has maintained their neutral stance on DE stock, giving a Hold rating on May 8.
Tami Zakaria has given his Hold rating due to a combination of factors affecting Deere’s Financial Services (FS) segment. While the FS segment experienced a 25% year-over-year increase in revenue, driven by growth in average receivables and leases financed, as well as higher financing rates, there were also less favorable signs. The net income’s growth was somewhat offset by a reduction in financing spreads due to higher interest rates, leading to decreased profitability margins. Additionally, there has been an increase in the provision for credit losses, indicating a potential rise in financial risk for the company.
Furthermore, the report indicates that delinquencies and non-performing receivables have both shown an uptick, which may presage future write-offs, although they remain low by historical standards. Despite a moderate forecast for FS net income growth in the current fiscal year, the combination of less favorable financing conditions and a need for higher provisions for credit losses contribute to a cautious outlook. This assessment, coupled with the relatively stable operating lease residual values, offers a balanced view, justifying the Hold rating on Deere’s stock.
Zakaria covers the Industrials sector, focusing on stocks such as Deere, Paccar, and The Middleby. According to TipRanks, Zakaria has an average return of 20.8% and a 66.38% success rate on recommended stocks.
In another report released on May 8, Deutsche Numis also maintained a Hold rating on the stock with a $401.00 price target.
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Deere (DE) Company Description:
Founded in 1837, Illinois-based Deere & Co. manufactures and distributes various equipment that is used in agriculture, construction, forestry, and turf care. The company operates through three business segments: Agriculture and Turf, Construction and Forestry, and Financial Services.
