Citigroup (NYSE:C) said it has increased its price target on Deere & Company (NYSE:DE) to $75. Earnings estimates were also raised, while a "Buy" rating was maintained.
Citigroup's Timothy Thein said in a note, "Our price target, and relative ranking amongst Buy rated names, both go up for DE as we see better N.A. large Ag equipment demand, and a more favorable price/cost spread driving upside to near-term numbers. Importantly for the stock, global grain price outlook has improved meaningfully on a tighter supply/demand outlook, with Citi Futures forecasting 8.2% stock-to-use for 2010-11 US corn crop (well below current USDA est. of 9.7%). In the last 30 crop years, US corn STU has fallen below 10% twice (95/96 and & 03/04) - two periods of solid relative outperformance for DE stock."
With the economic conditions much worse than has been reported, commodity prices are back in favor in a big way, which has been driving up the price and optimism concerning companies serving that market, like Deere does with its mining and farming machinery, and other companies like miners who are directly involved with commodities.
There's nothing in the economic outlook suggesting this will change any time soon.
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