Deere Powers Ahead: Q2 Beat, Analyst Boosts, More Upside

Key Points

• John Deere had a decent quarter, outperforming estimates despite a significant YOY contraction, but introduced uncertainty into the outlook.
• Capital returns are safe with dividends and repurchases, which reduce the share count. 
• Analysts are raising their price targets, leading this stock to a 20% gain relative to its early 2025 highs.  

Deere & Company NYSE: DE stock can plow its way higher in 2025 for many reasons, including the Q2 results, the 2025 guidance, the capital returns, the balance sheet and the analysts' response to the above. The takeaway for investors is that this blue-chip, high-quality, capital-returning agricultural machine could rise by another 20% or more following the Q2 price surge and continue rallying higher in 2026. 

The analysts’ response to the news sums it up nicely. MarketBeat tracks 20 analysts with current ratings on the stock, nine issued revisions within the first 24 hours of the report, and they all increased their price targets.

The Hold rating comes with a bullish bias, seven of the 20 rate the stock as a Buy and none as a Sell, and the fresh price targets are significantly higher.

The average of nine is $561, and the trimmed-set average is $560, fully 20% above the pre-release consensus and 10% above the February 2025 all-time high, with the high end leading to $600.

The technical signals are strong. The weekly chart shows a clearly bullish signal with the market setting a new high, compounded by bullish crossovers in the MACD and stochastic. This is a sign that multiple market forces are aligning, raising the odds that a sustainable rally can form. The critical support level is near $510, and the critical resistance is at the mid-May highs.

Deere Introduces Caution Into the Guidance

The worst news in the Deere Q2 report is the guidance, which was broadened around the original midpoint to reflect both positive and negative uncertainties.

While there is a risk the company will underperform its outlook for the year, the odds are higher that negatives, including tariffs, will be offset by positives, such as increased technological investment, leaving results in alignment with the midpoint or slightly above it.

As it is, the Q2 results show business contracting as expected, but far less than analysts had forecast.

Deere & Company Q2 revenue contracted by 16.3% but outperformed MarketBeat’s reported consensus by 1600 basis points, significantly improving market sentiment. Strengths were seen in the Production and Precision Agriculture and Construction and Forestry segments, which contracted by only 6% and 1%, respectively. Most of the weakness was seen in Small Ag and Turf, which contracted by a larger 23%.

Margin news is also better than expected. The company experienced margin contraction due to deleveraging and cost pressures, but executed well despite the headwinds. The net result is a 24% contraction in income. However, the $1.84 billion is sufficient to sustain a cash-flow positive quarter and GAAP earnings well above consensus.

John Deere Harvests Green for Its Investors: Capital Returns Are Robust and Reliable

Due to the cash flow outlook, John Deere’s capital return was robust in Q2 and will likely remain so in 2025. Returns in Q2 included dividends and share repurchases, which amounted to 1.26% in yield and a 2.2% reduction in share count. Cash flow also sustains a fortress balance sheet, which shows an increase in cash, a decrease in liability, and a 7% increase in equity for the quarter.

The risk for investors is that the distribution growth or buyback rate could slow if economic conditions change or the tariff impact is more profound than management anticipates.

Following the release, the price action in John Deere stock was mixed. The initial surge increased the price by nearly 10% to form a potentially bearish doji candle. The question is whether profit-taking will continue to cap gains or if a sustained rally will form, which is likely. The early market action following the initial surge suggests support remains elevated and will continue to drive price action in May.