Deere (DE) expects 2026 as the bottom of the agricultural equipment cycle based on order book trends, with investors slated to well-receive this guidance as channel checks indicate a potential fourth year of retail sales decline, Morgan Stanley said in a Thursday note.
Noting that short interest in Deere is near its highest in the last five years driven by weaker fiscal 2027 Early Order Program trends, Morgan Stanley said that the "moderately" raised 2026 guidance and the positive commentary about order books would lead to a positive initial stock reaction.
During the earnings call, Morgan Stanley said its questions would be centered around what gives the company's management confidence that 2026 will be the bottom, and separately, what is driving incremental weakness in Europe and South America and if those markets have bottomed.
Morgan Stanley maintained its overweight rating with a $730 price target.
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