Deere & Company Stock News and Forecast: DE stock jumps 5% on solid earnings report, bulls aim for $386


  • DE stock beat FQ4 consensus on bottom and top lines.
  • Demand for equipment has been strong.
  • Deere ended a union strike with a new contract on November 17.

Deere & Company (DE), makers of farm equipment and a whole lot more, surpassed skeptical critics to post upbeat earnings for the fiscal fourth quarter. DE stock is up 5.1% to $367.20 at the time of writing.

Deere & Company stock FQ4 Earnings Results: Forecasting a bright 2022

Fiscal fourth-quarter results beat on both bottom and top lines. Deere shareholders earned $4.12 per share (EPS) on revenue of $11.3 billion. Wall Street had expected EPS $3.82 per share on revenue of $10.3 billion.

More importantly, management's outlook for fiscal 2022 was much more optimistic. Deere raised guidance for net income to $6.5 to $7 billion, which places the top range above the $6.66 billion average expected by analysts.

"We expect demand for farm and construction equipment to continue benefiting from positive fundamentals, including favorable crop prices, economic growth, and increased investment in infrastructure," CEO John May said.

Deere ended a one-month union strike on November 17. The deal will add about $3.5 billion to future labor costs for the company, but management was unflinching when it said it did not see the new labor agreement greatly affecting profitability. J&P Morgan said the agreement would force the industrial powerhouse to raise prices by 1.5%. The tractor manufacturer agreed to raise salaries by 10% in the first year of the six-year contract and offered an $8,500 ratification bonus.

Deere & Company stock forecast: $386 is the goal for bulls

The previous two trading sessions' doji candles on the daily chart showed the very real uncertainty that traders brought into this week ahead of earnings. Now that earnings are behind us and DE stock is trading above $370, the target has now shifted all the way to $386.

$386 is key because DE shares have bounced down from there on no less than 11 occasions since March 18. Only from May 6 to 10 (three sessions) and on September 3 did DE price close above this level. Each time this barrier quickly resulted in a sell-off. Once above $386, DE shares could aim for the September 3 high of $393 or even make a push for the all-time high of $400.34 from May 10.

The 20-day moving average at $354.53 is the only clear support level, but it appears unlikely that Deere stock will correct in the near future. The more likely prospect is that the current turnover from growth stocks to value stocks will aid Deere shares in once again attempting a try at the all-time high. This thesis would also be in line with the double bottom pattern witnessed in mid-June and mid-October when shares bottomed just below $322.

DE daily chart

 

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