Aricultural equipment makers Deere (DE) and AGCO (AGCO) are retreating after Wells Fargo analyst Andrew Casey downgraded both stocks to Underperform from Market Perform in a note to investors earlier today. Casey now expects U.S. large farm equipment sales to sink on average 15%-20% in 2014 and 20%-25% in 2015, due to his commodity price outlook. Analysts' estimates for Deere's 2014 and 2015 results may drop significantly, and an upcoming decline in corn prices could pressure the stock, added the analyst. He slashed his price target range on Deere to $72-$75 from $90-$93. Similarly, Casey expects AGCO's shares to be pressured by decreasing commodity prices, and potential downward earnings estimate revisions for 2014 and beyond. The analyst also contended that AGCO - whose shares are generally "associated" with those of Deere, he believes - will be pressured by a potential longer term decline in Deere's stock. Casey cut his price target range on AGCO to $40-$43 from $51-$54. In early trading, Deere declined 2% to $89, while AGCO sank 3% to $51.50.
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