Stock was on the 2021 banner. Byrd analyst Meg Duber sees more gains for investors in 2022. Self-driving tractors are key to his investment thesis.
Deere (ticker:DE) stock is up 27% in 2021 and shares have gained about 125% since the end of 2018. Moreover, the stock has returned about 31% annually on average over the past five years. Five-year average annual return
Standard & Poor’s 500
Just under 18%. The Deere stock was a great choice for any wallet.
Dupre sees more gains to come. It raised its price target on Friday to $475 from $425 per share, indicating gains of about 25% from recent trading levels. Dobre retains its buy rating on the stock.
Agricultural fundamentals are improving, which is always a key factor for Deere. “USDA projects that total US crop yields for 2021 will rise 19.7% over 2020 levels while livestock yields are expected to grow 16.0%,” Dupree wrote in his report on Friday. More money for farmers translates into more sales for Derry.
But his advocacy is not based on the periodic recovery in farm income. He describes Derry as a technical pioneer in the field of agriculture. Deere recently launched a fully self-driving tractor at CES in Las Vegas. This technology impressed Dupree.
“The tractor is revolutionizing how vital functions (plowing, planting, harvesting) are accomplished, rendering previous patterns of farming obsolete and creating a multi-year fleet upgrade cycle,” Dupre added. “Deere is uniquely positioned due to the strength of its solution, while also evolving its business model towards a subscription model (Autonomy as a Service).” He thinks Deere can sell self-driving features on subscription, just like
TSLA is trying to do driver assistance features called Full Self Driving, or FSD.
It seems that making a self-driving tractor is a little easier than making a fully self-driving car. The tractor will only drive itself in a predetermined area, such as a farmer’s field. You won’t be cruising on a highway. Speeds are slower, and when obstacles are detected, the tractor communicates with the Deere Operations Center and the farmer to help deal with obstacle avoidance.
Deere launched the tractor at CES, and will eventually roll out its self-driving technology to other farming equipment like combine harvesters — giving Dobre confidence that Deere’s future remains bright.
Dupree is a bull derry. Overall, about 58% of analysts who cover Deere stock prices are buying. The average buy valuation ratio for stocks in the S&P 500 is about 55%. The average analyst price target is around $400 per share, up about 7% from recent levels.
Bird’s $475 target is one of the highest target prices on the street, according to Bloomberg. The highest target is $485 per share from Morgan Stanley analyst Courtney Yakavounis.
Derry’s shares were up 0.7% in morning trading on Friday. Standard & Poor’s 500 and
Dow Jones Industrial Average
Both are nearly flat.
Write to Al Root at [email protected]