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Credit Suisse’s analyst, Jamie Cook, met with Deere & Company (NYSE: DE) Investor Relations team, including Deputy Financial Officer Josh Jepsen and Head of Investor Relations, Brent Norwood.
The analyst maintained his Outperform rating on the shares and the price target of $472 post the meeting.
Cook believes that Deere’s technological adoption is accelerating. Higher input costs and resource scarcity are driving technology adoption, resulting in significant savings and the potential to manage resources better.
According to the analyst, as the precision AG business model evolves, Deere sees a greater opportunity to monetize the value it provides for its customers through pay per use or per acre rather than a point of sale. He argues that increasing the price per acre or use over time will assist in decreasing the amplitude of cycles.
Cook expects that shifting to a pay-per-acre or pay-per-use model will increase Deere’s market share among smaller farmers and contractors by eliminating hefty upfront expenses, which have traditionally been a deterrent for smaller clients.
The order book for 2023 appears to be quite promising. The supply chain issues persist, but they are in line with expectations.
Price Action: DE shares are trading lower by 2.71% at $326.14 on the last check Monday.
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