Buy Deere Stock, Analyst Says. Why Shares Caught an Upgrade.

Deere stock has struggled of late, but one analyst thinks now is the time to buy. (Justin Sullivan/Getty Images)

Eventually, the agricultural cycle will turn up. That will be good for Deere stock, which got upgraded by UBS on Friday.

UBS analyst Steven Fisher raised his rating on Deere stock to Buy from Hold, with a price target of $535. Deere stock closed on Thursday at $457.16, off 9% over the past three months.

Things haven’t been easy for Deere lately. Sales and earnings have declined for several years as commodity prices have fallen. In 2022, corn price peaked at over $8 per bushel. They are about $4.20 a bushel today. Fisher, however, expects 2026 to be the last of an earnings downturn before a recovery in 2027.

It may be a “bit early for the stock today based on elevated expectations,” wrote Fisher. But a recovery for earnings will be priced into the stock next year, he says.

Deere rose 0.3% on Friday, closing at $458.50, while the S&P 500 and Dow Jones Industrial Average gained about 0.5%.

With the upgrade, 50% of analysts covering the company rate the shares at Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Deere stock is about $522 a share.

Barron’s wrote positively about Deere stock in July, believing digital sales and improving demand for agriculture equipment would boost shares in the coming years.

The stock was about $503 at the time, which makes our call look as it was early. Things haven’t started out so well for the pick, with falling agricultural prices and weak guidance dinging investor sentiment.

Deere still has potential. And it can help investors hold on during a difficult patch for any stock when they get a vote of confidence from the Street.

Coming into Friday trading, Deere stock was up about 8% year to date and up about 13% over the past 12 months.

Write to Al Root at allen.root@dowjones.com