By Sam Boughedda
Daiwa Capital Markets analysts initiated coverage of Deere & Co (NYSE:DE) with an Outperform rating and $440 per share price target in a note to clients on Wednesday.
The analysts told investors in a note that Deere is well-positioned with a precision tech stack, connectivity, and operating center infrastructure to participate in the digitization of agriculture.
They explained that the firm's Outperform rating "reflects Deere's strength in precision technology and a solid market position while recognizing risks from weak construction spending and a sharper decline in farm income."
"Beyond near-term concerns over the economy, we find Deere uniquely positioned to benefit from the digitization of agriculture," wrote the analysts.
"DE stock is currently offering a 7% free cash flow yield and trading at 13x forward 12-month EPS, which, in our view, already reflects a mild recession. Given the dynamic economic environment, we expect to see some volatility in Deere stock and would recommend being tactical in adding to positions."
Deere shares have gained over 1.5% so far on Wednesday.