NEW YORK (AP) -- A Goldman Sachs analyst downgraded shares of Deere & Co. on Friday, saying crop prices and farm equipment sales will decline significantly in 2013.
THE OPINION: Analyst Jerry Revich dropped Deere to "Sell" from "Neutral," and lowered his price target to $85 per share from $98. Revich put Deere shares in a portfolio of stocks with strong negative recommendations.
Revich said farm equipment sales have been at record levels for the last four years. That means farmers have a lot of new equipment and will spend less on replacements for now. He said dealer inventories are growing rapidly and are at high levels. He added that crop supplies are also rising and prices for corn, soybeans, and wheat will decrease significantly compared to 2012, when the U.S. was hit by the worst drought in more than 50 years. That means less revenue for farmers.
Deere reported its fiscal second-quarter results on Wednesday. The Moline, Ill., company trimmed its forecast for growth in farm and construction equipment sales, saying global economic concerns and the long, cold winter in North America were hurting its earnings.
THE STOCK: Shares of Deere lost $2.33, or 2.6 percent, to $87.06 in afternoon trading. The stock has gained about 5.5 percent in the last month.