Earnings to Watch Next Week: Home Depot, Walmart, Target and Deere in Focus

Earnings Calendar For The Week Of August 16

Monday (August 16)

Ticker Company EPS Forecast
ATAI ATA -$0.18
FN Fabrinet $1.21
AG First Majestic Silver $0.09
TOELY Tokyo Electron Ltd PK $1.22

Tuesday (August 17)

IN THE SPOTLIGHT: HOME DEPOT, WALMART

HOME DEPOT: the largest home improvement retailer in the United States, is expected to report its second-quarter earnings of $4.42 per share, which represents year-over-year growth of about 10% from $4.02 per share seen in the same period a year ago.

The home improvement retailer would post revenue growth of nearly 7% to $40.68 billion. On average, Home Depot has beaten earnings estimates by more than 10% in the last four quarters.

“We are Overweight Home Depot (HD) given its best-in-class nature and structural housing tailwinds beyond N-T disruption from COVID-19. The stock seems attractively valued in the context of a potential 2H’20/2021 economic/housing boom,” noted Simeon Gutman, equity analyst at Morgan Stanley.

WALMART: The Bentonville, Arkansas-based retailer is expected to report its second-quarter earnings of $1.56 per share same as a year ago. However, the multinational retail corporation that operates a chain of hypermarkets’ revenue would decline over 1% to $135.9 billion. On average, the retail giant has beaten earnings estimates by over 17% in the last four quarters.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 17

Ticker Company EPS Forecast
AIT Applied Industrial Technologies $1.17
HD Home Depot $4.42
WMT Walmart $1.57
AMCR Amcor PLC $0.22
A Agilent $0.99
CDK Cdk Global $0.67
JKHY Jack Henry Associates $0.93
CREE Cree -$0.24

Wednesday (August 18)

IN THE SPOTLIGHT: TARGET

TARGET: One of the largest North American retailers offering customers both everyday essentials and fashionables, is expected to report its second-quarter earnings of $3.49 per share, which represents year-over-year growth of over 3% from $3.38 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 69%. The Minneapolis, Minnesota-based company would post year-over-year revenue growth of over 8% to $24.84 billion.

Walmart (WMT) & Target (TGT) likely to print upside given strong comp sales trends, a healthy consumer bolstered by child tax credits, & one of the best back to school seasons in retail. We prefer TGT given prospects of a greater beat and a lower relative valuation. We also enclose: Cowen’s Target x ULTA analysis, & our online grocery survey highlights WMT’s momentum. Raise TGT PT to $300 & maintain WMT’s $170 PT,” noted Oliver Chen, equity analyst at Cowen.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 18

Ticker Company EPS Forecast
LOW Lowe’s Companies $3.99
TGT Target $3.49
ADI Analog Devices $1.61
EAT Brinker International $1.71
TJX TJX Companies $0.58
VIPS Vipshop $2.32
YY YY -$0.60
NVDA Nvidia $1.02
KEYS Keysight Technologies $1.44
SNPS Synopsys $1.78
CSCO Cisco Systems $0.83
SQM Sociedad Quimica Y Minera De Chile $0.32
VNET 21Vianet -$0.06
TCEHY Tencent $0.52
MBT Mobile TeleSystems OJSC $20.23

Thursday (August 19)

IN THE SPOTLIGHT: KOHL’S

Kohl’s, the largest department store chain in the United States, is expected to report its second-quarter earnings of $1.17 per share, which represents year-over-year growth of over 565% from a loss of -$0.25 per share seen in the same period a year ago.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 19

Ticker Company EPS Forecast
KSS Kohl’s $1.17
TPR Tapestry Inc $0.68
EL Estée Lauder $0.51
M Macy’s $0.19
BJ BJs Wholesale Club Holdings Inc $0.63
MSGS Madison Square Garden Sports -$0.76
AMAT Applied Materials $1.77
ROST Ross Stores $0.97
FTCH Farfetch -$0.30
NCMGY Newcrest Mining Ltd PK $0.75
GFI Gold Fields $0.47

Friday (August 20)

IN THE SPOTLIGHT: DEERE

Deere & Company, the world’s largest maker of farm equipment, is expected to report its fiscal third-quarter earnings of $4.57 per share, which represents year-over-year growth of over 77% from $2.57 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the agricultural, construction, and forestry equipment manufacturer has delivered an earnings surprise of over 65%. The company forecasts net income for fiscal 2021 in the range of $5.3 billion to $5.7 billion, up from the previous projection of $4.6 billion to $5 billion, according to ZACKS Research.

Deere (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given a historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” noted Courtney Yakavonis, equity analyst at Morgan Stanley.

“With mgmt continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE’s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 20

Ticker Company EPS Forecast
DE Deere & Company $4.57
BKE Buckle $0.51
FL Foot Locker $0.97

 

Deere Could Hit New All-Time High on Strong Q3 Earnings; Target Price $421

Deere & Company, the world’s largest maker of farm equipment, is expected to report its fiscal third-quarter earnings of $4.57 per share, which represents year-over-year growth of over 77% from $2.57 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the agricultural, construction, and forestry equipment manufacturer has delivered an earnings surprise of over 65%. The company forecasts net income for fiscal 2021 in the range of $5.3 billion to $5.7 billion, up from the previous projection of $4.6 billion to $5 billion, according to ZACKS Research.

Deere shares have gained over 43% so far this year. The stocks traded 0.26% lower at $384.56 on Friday. But next week’s better-than-expected results could help the stock hit new all-time highs.

Analyst Comments

Deere (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given a historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” noted Courtney Yakavonis, equity analyst at Morgan Stanley.

“With mgmt continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE’s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

Deere Stock Price Forecast

Eleven analysts who offered stock ratings for Deere in the last three months forecast the average price in 12 months of $421.50 with a high forecast of $450.00 and a low forecast of $346.00.

The average price target represents a 9.61% change from the last price of $384.54. From those 11 analysts, eight rated “Buy”, two rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $442 with a high of $646 under a bull scenario and $209 under the worst-case scenario. The firm gave an “Overweight” rating on the farm equipment maker’s stock.

Several other analysts have also updated their stock outlook. Credit Suisse raised the target price to $439 from $427. JPMorgan lifted the target price to $346 from $330. UBS increased the target price to $391 from $360.

Check out FX Empire’s earnings calendar

Deere Shares Gain on Q1 Earnings Beat, Guidance Hike

Deere & Company shares jumped about 2% in pre-market trading on Friday after the world’s largest maker of farm equipment reported better-than-expected earnings in the fiscal second quarter and lifted its full-year guidance.

Agricultural, construction and forestry equipment manufacturer reported net income of $1.790 billion for the second quarter ended May 2, 2021, or $5.68 per share, compared with net income of $666 million, or $2.11 per share, for the quarter ended May 3, 2020. That was also higher than the market expectations of $4.49 per share.

The Moline, Illinois-based company said its worldwide net sales and revenues increased 30% to $12.058 billion for the second quarter of 2021 and rose 25% to $21.170 billion for six months.

Deere forecasts net income for fiscal 2021 is forecast to be in a range of $5.3 billion to $5.7 billion. Full-year earnings forecast raised to a range of $5.3 to $5.7 billion.

Following this, Deere shares rose about 2% to $361.0 in pre-market trading on Friday. The stock rose over 30% so far this year.

Analyst Comments

Deere’s (DE) F2Q continued to see a steady increase into today’s report. Still, today’s results and FY21 guidance were significantly ahead of expectations, and we believe the company’s operating leverage, the updated FY21 forecast and strong pricing should support the shares,” noted Stephen Volkmann, equity analyst at Jefferies.

“The real standout for us is pricing, where DE is the only company we follow driving significant price in the current tight market conditions.”

Deere Stock Price Forecast

Fourteen analysts who offered stock ratings for Deere in the last three months forecast the average price in 12 months of $408.64 with a high forecast of $455.00 and a low forecast of $365.00.

The average price target represents a 15.04% increase from the last price of $355.22. Of those 14 analysts, 12 rated “Buy”, two rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $410 with a high of $625 under a bull scenario and $181 under the worst-case scenario. The firm gave an “Overweight” rating on the farm equipment maker’s stock.

Deere & Company (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given an historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” noted Courtney Yakavonis, equity analyst at Morgan Stanley.

“With mgmt continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE’s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

Several other analysts have also updated their stock outlook. Deere & Company had its price objective boosted by Robert W. Baird to $425 from $375. Robert W. Baird currently has an outperform rating on the industrial products company’s stock.

Stifel Nicolaus raised their price target to $365 from $325 and gave the stock a buy rating. Deutsche Bank raised their price target to $402 from $360 and gave the stock a hold rating.

Check out FX Empire’s earnings calendar

Deere Earnings to More Than Double in Q2 But Stock Has Limited Upside

Deere & Company, the world’s largest maker of farm equipment, is expected to report its fiscal second-quarter earnings of $4.49 per share, which represents year-over-year growth of over 112% from $2.11 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the agricultural, construction, and forestry equipment manufacturer has delivered an earnings surprise of over 60%. The Moline, Illinois-based company would post year-over-year revenue growth of over 28% to $10.5 billion.

The company forecasts net income for fiscal 2021 in the range of $4.6 billion to $5 billion, up from the previous projection of $3.6 billion-$4 billion.

But BMO Capital Markets analyst Joel Tiss downgraded the stock to market perform from outperform, stating that even a bullish scenario for the underlying business wouldn’t cause a big jump for the stock. Deere shares rose over 40% so far this year.

Deere Price Forecast

Sixteen analysts who offered stock ratings for Deere in the last three months forecast the average price in 12 months of $395.44 with a high forecast of $455.00 and a low forecast of $287.00.

The average price target represents a 3.57% increase from the last price of $381.80. Of those 16 analysts, 12 rated “Buy”, three rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $410 with a high of $625 under a bull scenario and $181 under the worst-case scenario. The firm gave an “Overweight” rating on the farm equipment maker’s stock.

Several other analysts have also updated their stock outlook. Deere & Company had its price objective boosted by Robert W. Baird to $425 from $375. Robert W. Baird currently has an outperform rating on the industrial products company’s stock.

Stifel Nicolaus raised their price target to $365 from $325 and gave the stock a buy rating. Deutsche Bank raised their price target to $402 from $360 and gave the stock a hold rating.

Analyst Comments

Deere & Company (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given an historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” noted Courtney Yakavonis, equity analyst at Morgan Stanley.

“With mgmt continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE’s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

Check out FX Empire’s earnings calendar

Earnings to Watch Next Week: Home Depot, Walmart, Target and Deere in Focus

Earnings Calendar For The Week Of May 17

Monday (May 17)

Ticker Company EPS Forecast
DM Dominion Midstream Partners -$0.10
RYAAY Ryanair -$2.04

Tuesday (May 18)

IN THE SPOTLIGHT: HOME DEPOT, WALMART

HOME DEPOT: The largest home improvement retailer in the United States is expected to report its first-quarter earnings of $3.06 per share, which represents year-over-year growth of about 47% from $2.08 per share seen in the same period a year ago.

The home improvement retailer would post revenue growth of 21% to $34.2 billion. In the last four quarters, on average, Home Depot has beaten earnings estimates about 2%.

The Atlanta, Georgia-based company’s shares rose over 20% so far this year. Home Depot’s better-than-expected results, which will be announced on Tuesday, could help the stock hit new all-time highs. But the stock’s performance could hinge on margins.

“We expect a 25% to 30% Q1’21 comp as top-line strength likely continued through the quarter. We model gross margin down 40 bps. For context, in Q4 lumber inflation pulled gross margin down ~30 bps and likely worsened sequentially. On SG&A, assuming the per sq ft 2-year stack holds from Q4 (+24%), SG&A should lever 360 to 400 bps,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“In our model, this combination produces EPS of $3.55 to $3.85 vs consensus at $2.95. While a ’21 guide was not provided, if the ’20 top-line exit rate held through ’21, HD would expect a flat to slightly positive comp and an EBIT margin of at least 14%.”

WALMART: The Bentonville, Arkansas-based retailer is expected to report its first-quarter earnings of $1.21 per share, which represents year-over-year growth of about 47% from $1.18 per share seen in the same period a year ago.

However, the multinational retail corporation that operates a chain of hypermarkets’ revenue would decline about 2% to $131.8 billion. In the last four quarters, on average, the retail giant has beaten earnings estimates about 9%.

“We raise 1Q22 EPS estimate to $1.23 from $1.22, on stronger Walmart U.S. comps, more modest SG&A deleverage, offsetting lower International segment revenues on divestitures, and remain above Street’s $1.21. We raise our Walmart U.S. comps to +0.5%, ahead of Street’s +0.3%, and our updated estimates now imply 2-year stack growth of +10.5% Y/Y, in-line with 4Q21,” noted Oliver Chen, equity analyst at Cowen.

“We expect a tailwind from stimulus, and improved apparel and other general merchandise categories, offset by grocery and other essential categories normalizing. Recall in 1Q21 Grocery improved +LDD, Health & Wellness +HSD, and General Merchandise +MSD.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MAY 18

Ticker Company EPS Forecast
HD Home Depot $3.06
WMT Walmart $1.21
SE Spectra Energy -$0.45
NTES NetEase $6.35
BZUN Buzzi Unicem RSP $0.60
M Macy’s -$0.39
DQ Daqo New Energy $1.18
BIDU Baidu $10.63
KC Kutcho Copper -$0.16
STE Steris $1.79
TTWO Take Two Interactive Software $0.68
TCOM Trip.com Group Ltd -$2.05
JHX James Hardie Industries $0.29
TTM Tata Motors $0.47
MBT Mobile TeleSystems OJSC $19.37
AAP Advance Auto Parts $3.08
DY Dycom Industries $0.13
ASND Ascendant Resources -$2.06

Wednesday (May 19)

IN THE SPOTLIGHT: TARGET CORP

Target, one of the largest North American retailers offering customers both everyday essentials and fashionables, is expected to report its first-quarter earnings of $2.16 per share, which represents year-over-year growth of over 266% from $0.59 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 60%. The Minneapolis, Minnesota-based company would post year-over-year revenue growth of over 9% to $21.51 billion.

Target’s better-than-expected results, which will be announced on May 19, would help the stock hit new all-time highs. Target shares rose over 19% so far this year.

“We raise 1Q21 EPS to $2.18E, ahead of Street’s $2.10 as we raise our comps estimate to+11.5%, and tweak margin assumptions. We now model comps +11.5%, yielding 2-year stack growth of +22.3%, accelerating sequentially by +30bps,” noted Oliver Chen, equity analyst at Cowen.

“We are ahead of Street’s+8.2% consensus estimate, and think our estimates could ultimately prove conservative as Target’s (TGT) category portfolio should see the retailer benefit from the stimulus, improving trends in apparel and other re-opening categories, along with continued strength in-home, which will more than offset normalizing food, essentials, and other category comps.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MAY 19

Ticker Company EPS Forecast
VIPS Vipshop $2.19
JD JD.com $2.29
LOW Lowe’s Companies $2.59
CAE Cae USA $0.16
ADI Analog Devices $1.45
TGT Target $2.16
TJX TJX Companies $0.30
EXP Eagle Materials $1.23
RXN Rexnord $0.45
KEYS Keysight Technologies $1.33
CSCO Cisco Systems $0.82
LB L Brands $1.15
SNPS Synopsys $1.53
SQM Sociedad Quimica Y Minera De Chile $0.25
YY YY -$0.39
CPRT Copart $0.80
OMVJF OMV $0.97

Thursday (May 20)

Ticker Company EPS Forecast
MNRO Monro Muffler Brake $0.29
KSS Kohl’s $0.06
BRC Brady $0.65
RL Ralph Lauren -$0.75
HRL Hormel Foods $0.41
BJ BJs Wholesale Club Holdings Inc $0.56
PANW Palo Alto Networks $1.28
ROST Ross Stores $0.88
FLO Flowers Foods $0.40
AMAT Applied Materials $1.51
DECK Deckers Outdoor $0.67
TCEHY Tencent $0.54
TBLMY Tiger Brands Ltd PK $0.34

Friday (May 21)

IN THE SPOTLIGHT: DEERE & COMPANY

Deere & Company, the world’s largest maker of farm equipment, is expected to report its fiscal second-quarter earnings of $4.49 per share, which represents year-over-year growth of over 112% from $2.11 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the agricultural, construction, and forestry equipment manufacturer has delivered an earnings surprise of over 60%. The Moline, Illinois-based company would post year-over-year revenue growth of over 28% to $10.5 billion.

Deere’s better-than-expected results, which will be announced on Friday, would help the stock hit new all-time highs. Deere shares rose over 42% so far this year.

Deere & Company (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given an historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” noted Courtney Yakavonis, equity analyst at Morgan Stanley.

“With mgmt continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE’s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MAY 21

Ticker Company EPS Forecast
ROLL Rbc Bearings $1.05
DE Deere & Company $4.49
BKE Buckle $0.29
BAH Booz Allen Hamilton $0.84
VFC VF $0.28
FL Foot Locker $1.06

Deere Overloved and Overbought Ahead of Report

Deere Inc. (DE) is trading lower on Thursday after a top tier Wall Street bank downgraded the stock to ‘Market Perform’. It’s testing 50-day moving average support for the first time since October 2020, just one week before the company reports Q2 earnings, when analysts expect a profit of $4.28 per-share on $10.27 billion in revenue. If met, earnings-per-share (EPS) will mark more than a 100% profit increase compared to the same quarter in 2020.

Benefiting From Price Hikes

The stock is benefiting from higher agricultural commodity prices that have forced all sorts of food price hikes in 2021. It’s also a high tech leader, transitioning into fully autonomous tractors, combines, cotton pickers, sugarcane harvesters, and loaders as well as soil preparers, seeders, and crop care equipment. The conversion is adding to the bottom line, expanding margins in a multi-billion dollar industry with few competitors.

BMO Capital Markets analyst Joel Tiss downgraded the stock to ‘Market Perform’ from ‘Outperform’ on Thursday, noting the agriculture business could be on the front end of multi-year growth cycle, but “investing in Deere may not be the best way to reap the rewards”. In addition, he warns that “even a bullish scenario for the underlying business wouldn’t cause a big jump for the stock”, which has more than tripled in price since March 2020.

Wall Street and Technical Outlook

Wall Street consensus has eased in reaction to share gains, yielding an ‘Overweight’ rating based upon 14 ‘Buy’, 1 ‘Overweight’, 6 ‘Hold’, and 2 ‘Sell’ recommendations. Price targets currently range from a low of $287 to a Street-high $455 while the stock is set to open Thursday’s session about $30 below the median $404 target. A strong quarter may not generate much upside despite this modest placement, given extremely overbought readings after the vertical uptrend into 2021.

Deere topped out at 175 in 2018 and entered a trading range that broke down during 2020’s pandemic decline. It posted a three-year low and turned sharply higher, breaking out above resistance in August. Vertical price action stalled at 392 in March 2021 while a breakout attempt this week failed, reinforcing resistance. The stock has fallen to a 7-week low in the pre-market, highlighting weakness that could signal an intermediate correction lasting for weeks or months.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

U.S. Market Wrap and Forecast for Monday

Early buying pressure faded during Friday’s expiration session, dropping major indices into the red. WTI crude oil reversed, dropping below 60 as temperatures lifted above the freezing mark in Texas and southern states. The 30-year bond posted another monthly low, continuing the relentless rise in yields across short- and long-dated instruments. Gamestop Inc. (GME) hit a monthly low, forcing another batch of Reddit traders to look for a less stressful hobby.

Roku Rocks

Roku Inc. (ROKU) posted a Q4 2020 profit of $0.49 per-share, well above expectations for a $0.03 loss, lifting the streaming hardware provider to a three-day high. However, rich valuation weighed on buying interest, stalling price well below Tuesday’s all-time high at 486.72. Deere and Co. (DE) reported the second blowout quarter in a row, lifting the agricultural giant to an all-time high above 330. The stock rose more than 55% in 2020 and has added another 20% so far in 2021.

Russell-2000 index ignored blue chip selling pressure, lifting into the midpoint of the weekly trading range. This instrument has rallied 55% since September, carving one of the strongest small cap buying waves since the 1990s. Speculative fervor in the Reddit crowd is driving the upside, with SPACs acting as petri dishes for hundreds of start-up operations. Unfortunately, most small caps won’t succeed down the road due to roadblocks set up by trillion dollar mega-techs.

Post-Options Hangover Ahead

Discovery Inc. (DISCA) could provide early metrics on the paid streaming service it launched in January in Monday’s pre-market earnings release. Home Depot Inc. (HD) and Lowes Inc. (LOW) lead next week’s blue chip calendar, highlighting do-it-yourself income during the pandemic’s second wave. The bubble in mall anchors could break after department stores release miserable quarterly results, which should confirm the slow bleed of long-term customers.

Consumer confidence and durable goods head next week’s economic calendar, along with new home sales. Millennials have entered their nesting stages, scooping up the limited supply of existing homes and driving prices to all-time highs. The supply crunch is forcing many nest builders to take advantage of remote work opportunities and build homes far away from west coast and northeast urban centers, in a phenomenon that will alter US demographics for decades.

For a look at all of today’s economic events, check out our economic calendar.

Why Shares Of Deere Are Up By 10% Today?

Deere Video 19.02.21.

Deere Easily Beat Earnings Estimates

Shares of Deere are up by more than 10% in today’s trading session after the company provided its quarterly report which was much better than analysts expected.

Deere reported revenue of $9.11 billion and GAAP earnings of $3.87 per share, beating analyst estimates on both earnings and revenue. The average earnings estimate for this quarter was $2.16 per share so Deere exceeded earnings estimates by as much as  $1.71 per share. Compared to the same quarter of the previous year, Deere managed to grow its revenue by 19% while its earnings inreased by 137%.

The company noted that improving conditions in the farm and construction sectors boosted its performance. Deere expects that current positive catalysts will remain in place in 2021 so it has increased its full-year earnings forecast to $4.6 billion – $5 billion. Most likely, analysts will soon update their current full-year forecasts to reflect the recent developments which may provide some additional support to the stock.

What’s Next For Deere?

Shares of Deere managed to gain strong upside momentum after the release of the quarterly report which is not surprising given the strength of the company’s financial results.

U.S. Treasury yields continue to rise which means that investors are positioning themselves for higher inflation. Inflationary environment is typically favorable for cyclical industries, and Deere may enjoy increased demand and higher prices for its products.

Despite the strength of the recent upside move, Deere is valued at just above 20 forward P/E which may be considered cheap for a company that shows strong results in the current price environment.

It remains to be seen whether will we see notable rotation from tech stocks into cyclical stocks if yields continue to rise, but Deere shares have decent chances to continue their current upside trend even without such rotation.

For a look at all of today’s economic events, check out our economic calendar.

Deere Starts 2021 on Strong Note, Shares Gain Over 7% on Upbeat Earnings

Deere & Company, the world’s largest maker of farm equipment, reported better-than-expected earnings in the first quarter on improved demand for farm and construction machines, sending its shares up over 7% in pre-market trading on Friday.

Agricultural, construction and forestry equipment manufacturer reported net income of $1.224 billion for the first quarter ended January 31, 2021, or $3.87 per share, compared with net income of $517 million, or $1.63 per share, for the quarter ended February 2, 2020. That was nearly doubled than the Wall Street consensus estimates of $2.12 per share.

The Moline, Illinois-based company said its worldwide net sales and revenues increased 19%to $9.112 billion. Equipment operations net sales were $8.051 billion for the quarter, compared with $6.530 billion in 2020.

Deere forecasts net income attributable for fiscal 2021 in a range of $4.6 billion to $5.0 billion, an upgraded from the previous forecast of $3.6 billion-$4.0 billion.

“With 1Q Equip Ops margins of 17.1% coming in ~6ppts+ above Street & well above DE‘s 15% target during the seasonally weakest Q of the year, we continue to see an upside to DE‘s mid-cycle targets. We expect a strong reaction to both the 1Q print and DE‘s 25%+ raise to FY21 net income guidance,” said Courtney Yakavonis, equity analyst at Morgan Stanley.

Following this upbeat result, Deere‘s shares, which surged over 55% last year, rose over 7% to $321.79 in pre-market trading on Friday.

Deere Stock Price Forecast

Seventeen analysts who offered stock ratings for Deere in the last three months forecast the average price in 12 months of $309.63 with a high forecast of $400.00 and a low forecast of $220.00.

The average price target represents a 3.12% increase from the last price of $300.25. From those 17 analysts, 12 rated “Buy”, four rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $341 with a high of $467 under a bull scenario and $146 under the worst-case scenario. The firm gave an “Overweight” rating on the agricultural equipment manufacturer’s stock.

Analyst Comments

Deere (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given an historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” Morgan Stanley’s Yakavonis added.

“With management continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE‘s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

Upside and Downside Risks

Risks to Upside: 1) Recovery in commodity prices and US cash receipts. 2) Better than expected margin improvement efforts. 3) US infrastructure bills pass, driving outsized C&F growth – highlighted by Morgan Stanley.

Risks to Downside: 1) Commodity prices truncate the ongoing replacement cycle. 2) Excess Used inventories limit pricing power and demand pull-through. 3) Mis-execution around 15% operating margin target. 4) Supply chain woes and price/material headwinds persist.

Check out FX Empire’s earnings calendar

Strong Fundamental Case Emerging for AGCO; Morgan Stanley Revised Target Price to $122

Morgan Stanley raised their stock price forecast on AGCO to $122 from $195, assigning an “Overweight” rating and said they see a strong fundamental case emerging for the agricultural equipment manufacturer as top-line acceleration is complemented by upside to margin estimates and an attractive valuation paradigm.

The industrial products company reported an EPS of $2.09 per share in the third quarter, way above the market consensus estimate of $0.97 per share. That was the third time AGCO had surpassed the Wall Street consensus estimates over the last four quarters.

“We expect AGCO’s revenue growth to accelerate in 2021 on the back of accelerating industry demand trends in both North America and Europe. Tangible progress towards AGCO’s 10% margin target is also underappreciated and not embedded in consensus numbers. We are raising our FY21/FY22 EPS estimates by 10-12% on the back of these dynamics. Our FY21/22 operating margin estimates are 60-70bps above consensus and our FY21/22 EPS stand 10% above consensus for both years. Further, AGCO screens favourably on a relative basis vs. both the market multiple and Ag Equipment peers,” noted Courtney Yakavonis, equity analyst at Morgan Stanley.

“As positive revisions begin to materialize in 2021, we expect the valuation gap to the market to close. Our $122 price target is based on 16.2x FY22 EPS, which represents a 20% discount to our equity strategy team’s target market multiple of 20.25x. AGCO also currently trades at a 20% discount to DE vs. its historical discount of 0%, but our price target still embeds similar discount vs. our Deere & Co. (DE) target multiple, presenting upside to our base case valuation if the gap to DE converges,” Yakavonis added.

Morgan Stanley gave a target price of $165 under a bull-case scenario and $54 under the worst-case scenario. Other equity analysts also recently updated their stock outlook. AGCO had its price objective boosted by Credit Suisse Group to $89 from $79. Credit Suisse Group currently has a neutral rating on the industrial products company’s stock. Barclays raised to an equal weight rating from an underweight and lifted their stock price forecast to $92 from $58.

In addition, BMO Capital Markets lifted their price objective to $110 from $90 and gave the company an outperform rating. Deutsche Bank raised their target price to $92 from $78 and gave the company a hold rating. At last, JP Morgan upped to an overweight rating from a neutral rating and set a $97 price objective.

Thirteen analysts forecast the average price in 12 months at $100.50 with a high forecast of $114.00 and a low forecast of $89.00. The average price target represents a 12.87% increase from the last price of $89.04. From those 13 analysts, nine rated “Buy”, four rated “Hold” and none rated “Sell”, according to Tipranks.

AGCO’s shares closed 0.70% lower at $89.04 on Monday. However, the stock is up over 15% so far this year.

“As a pure-play on ag equipment, AGCO has exposure to broad-based swings in grain prices, as well as the North American replacement cycle, though less so than peers. Ag Equipment remains our favourite Machinery end market for 2021, with double-digit end-market growth across both NA and EU Ag Equipment – AGCO remains the purest play on this theme,” Morgan Stanley’s Yakavonis added.

“We remain optimistic on share gains associated with recent efforts to standardize equipment across geographies, with the company’s IDEAL Combine roll out also likely to result in tangible share gains. We are increasingly seeing evidence of more sustained margin improvement and top-line outperformance vs. AGCO’s primary end markets,”

Deere Earnings Beat Wall Street Estimates; Forecasts Net Income Between $3.6-4.0 Billion for FY2021

Deere & Company, the world’s largest makers of farm equipment, reported better-than-expected earnings in the fourth quarter as demand for farm machines bounced on higher crop prices and government subsidy payments.

Agricultural, construction and forestry equipment manufacturer reported net income of $757 million for the fourth quarter ended November 1, 2020, or $2.39 per share, beating market expectations of $1.55 per share, up compared with net income of $722 million, or $2.27 per share, same period last year.

“The coronavirus pandemic was undoubtedly a headwind for Deere in fiscal 2020, but the company managed to post resilient operating margins in the fourth quarter, largely due to cost-cutting and solid pricing. We are raising our fair value estimate to $187 per share from $183 due to a more favourable near-term outlook than we previously modelled. In fiscal 2021, we expect Deere’s top-line to grow by roughly 10% compared with 2020,” said Brian Bernard, sector director at Morningstar.

“We expect Deere will benefit from increased investment from its dealer network over our forecast, resulting in 3% average sales growth from 2021-2025,” Bernard added.

For fiscal 2020, net income attributable to Deere & Company was $2.751 billion, or $8.69 per share, compared with $3.253 billion, or $10.15 per share, in 2019. Worldwide net sales and revenues decreased 2%, to $9.731 billion, for the fourth quarter of 2020 and declined 9%, to $35.540 billion, for the full year.

However, uncertainties regarding supply constraints as well as labour force availability due to the ongoing COVID-19 pandemic could negatively affect the company’s results and financial position in the future.

Deere’s shares closed 1.94% lower at $256.43 on Wednesday amid a weak broader market. However, the stock is down about 50% so far this year.

Net income attributable to Deere & Company for fiscal 2021 is forecast to be in a range of $3.6 billion to $4.0 billion. In the year ahead, Deere expects to benefit from improving conditions in the farm economy and stabilization in construction and forestry markets, according to John C. May. That forecast is higher than the Wall Street estimate of $3.3 billion.

Executive Comments

“Higher crop prices and improved fundamentals are leading to renewed optimism in the agricultural sector and improving demand for farm equipment. At the same time, we are looking forward to realizing the benefits of our smart industrial operating strategy, which is designed to accelerate the delivery of solutions that will drive improved profitability and sustainability in our customers’ operations,” said John C. May, chairman and chief executive officer.

Deere Stores Stock Price Forecast

Ten equity analysts forecast the average price in 12 months at $254.70 with a high forecast of $285.00 and a low forecast of $220.00. The average price target represents a -0.67% decrease from the last price of $256.43. From those ten analysts, four rated “Buy”, five rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $335 with a high of $467 under a bull-case scenario and $134 under the worst-case scenario. The firm currently has an “Overweight” rating on agricultural equipment manufacturer’s stock.

Several other analysts have also upgraded their stock outlook. Deere & Company had its price objective raised by Robert W. Baird to $281 from $250. The brokerage currently has an outperform rating on the industrial products company’s stock. Deutsche Bank raised their price target to $244 from $227 and gave the stock a hold rating. BMO Capital Markets increased their price objective to $235 from $150 and gave the stock an outperform rating.

Analyst Comments

“Deere is one of the highest quality, most defensive names within the broader Machinery universe, given a historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” said Courtney Yakavonis, equity analyst at Morgan Stanley.

“With mgmt continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in Deere’s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group,” Yakavonis added.

Upside and Downside Risks

Risks to Upside: 1) Recovery in commodity prices and US cash receipts. 2) Better than expected margin improvement efforts. 3) US infrastructure bills pass, driving outsized C&F growth – highlighted by Morgan Stanley.

Risks to Downside: 1) Commodity prices truncate ongoing replacement cycle. 2) Excess Used inventories limit pricing power and demand pull-through. 3) Mis-execution around 15% operating margin target. 4) Supply chain woes and price/material headwinds persist.

Check out FX Empire’s earnings calendar

Earnings to Watch Next Week: Autohome, Medtronic and Deere & Company in Focus

Earnings Calendar For The Week Of November 23

Monday (November 23)

IN THE SPOTLIGHT: AUTOHOME

Autohome, a leading online destination for automobile consumers in China, is expected to report a profit of $6.31 in the third quarter with possible revenue growth of over 6% as demand for cars recovered in the world’s second-biggest economy.

The company has reported a higher-than expected-earnings in most of the last four quarters. Autohome Inc is expected to show an increase in its third-quarter earnings to 96 cents​ per share according to the mean Refinitiv estimate from seven analysts. Wall Street expects results to range from 89 cents to ​$1.02 per share, Reuters reported.

“We forecast ATHM’s revenue to grow 6% YoY to 2.3 billion yuan in 3Q20, and beat the higher end of its 3Q20 revenue guidance of 2,240 million to 2,280 million yuan, within which we forecast: (1) its media service revenue to remain flattish YoY; (2) its lead generation revenue to grow 1% YoY; and (3) its online marketplace revenue to increase 30% YoY supported by strong data product revenue growth (i.e. we expect ATHM’s data product revenue to increase 50% YoY in 3Q20). In addition, we expect ATHM’s 3Q20 non-GAAP net margin to improve ~5ppts YoY to 37% thanks to its effective cost control and better return of 818 Global Auto Show event this year vs. last year,” said Eddy Wang, equity analyst at Morgan Stanley.

“China’s auto market has witnessed a consistent recovery in 3Q20: New car sales have seen a decent recovery with new car sales growth improving to 8% YoY in 3Q20, sustaining its recovery trend since 2Q20. We note that new car sales growth continued to increase over 9% YoY in October, which bodes well for auto sales recovery to continue in 4Q20, the traditional peak season for auto sales in China,” Wang added.

Autohome’s shares closed 1.98% higher at $101.83 on Friday; the stock is up over 1% so far this year.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 23

Ticker Company EPS Forecast
KFY Korn Ferry International $0.05
PLAN Progressive Planet -$0.10
BZUN Buzzi Unicem RSP $1.17
MNTA Momenta Pharmaceuticals -$0.46
CBT Cabot $0.52
DQ Daqo New Energy $0.60
CENTA Central Garden Pet -$0.04
ARWR Arrowhead Research -$0.12
A Agilent $0.94
AMBA Ambarella $0.05
URBN Urban Outfitters $0.44
TCOM Trip.com Group Ltd $1.02
IMMU Immunomedics -$0.29
VIST Vista Oil Gas -$0.19
GPFOY Financiero Inbursa ADR $0.09
MSNFY Minera Frisco ADR $0.05
GCTAY Siemens Gamesa ADR $0.01
AEG Aegon $0.27
TLK Telekomunikasi Indns Tbk Prshn Pp Pt $0.40
WF Woori Bank $1.57

Tuesday (November 24)

IN THE SPOTLIGHT: MEDTRONIC

Medtronic, an American Irish-domiciled medical device company, is expected to report a $0.80 profit in the second quarter of the fiscal year 2021 after reporting $0.62 earnings per share in the second quarter of the fiscal year, topping the market estimate of $0.21 by $0.41.

Sell-side analysts forecast that Medtronic plc will post 3.93 earnings per share for the current year, according to American Banking and Market News.

“Peer C3Q results across cardiovascular, neuromod, surgical, and diabetes suggest up to ~5 points of F2Q upside. The Risk/ Reward for Medtronic is positive but resurgence concerns have muted the near-term upside case for “Phase 2” Large-Caps despite vaccine data,” said David R. Lewis, equity analyst at Morgan Stanley.

“Our Medtronic model currently sits at $7,125 million in total F2Q21 revenues (reflecting -8.4% organic declines) and $0.78 in EPS, roughly in-line with consensus at ~$7,064mn in revenues and $0.80 in EPS. We model ~$90 million in COVID-19 driven, incremental ventilator sales this quarter (following $150 million in both F4Q and F1Q), as demand in certain regions has likely waned but Emerging Markets remained as of F1Q EPS,” R. Lewis added.

Medtronic’s shares closed 0.75% lower at $110.16 on Friday. However, the stock is down about 3% so far this year.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 24

Ticker Company EPS Forecast
CPG Compass Group -£6.52
PNN Pennon Group £29.94
SHB Shaftesbury -£1.70
WB Weibo $0.60
EV Eaton Vance $0.87
NJR New Jersey Resources $0.57
DLTR Dollar Tree $1.15
SJM J.M. Smucker $2.22
BBY Best Buy $1.64
ADI Analog Devices $1.33
HRL Hormel Foods $0.44
DKS Dick’s Sporting Goods $0.98
J Jacobs Engineering Group Inc $1.32
BURL Burlington Stores $0.16
DY Dycom Industries $1.02
CPB Campbell Soup $0.91
PDCO Patterson Companies $0.38
JWN Nordstrom -$0.05
GPS Gap $0.31
ADSK Autodesk $0.95
HPQ HP $0.52
VNET 21Vianet -$0.19
VMW VMware $1.44
AEO American Eagle Outfitters $0.32
CBPO China Biologic $1.34
JRONY Jeronimo Martins $0.45
HOCPY Hoya Corp $0.74

Wednesday (November 25)

IN THE SPOTLIGHT: DEERE & COMPANY

Deere & Company, the world’s largest makers of farm equipment, is performing excellently so far this year. Shares of the Agricultural, construction and forestry equipment manufacturer are up about 50% so far this year. The company’s earnings report next week will provide investors with an insight into 2021, where it is also expected a profit of $1.31 in the fourth quarter.

In the previous quarter, Deere & Company reported $2.57 earnings per share, topping the consensus estimate of $1.26 by $1.31. The company had revenue of $7.86 billion for the quarter, compared to the consensus estimate of $6.70 billion. However, the company’s revenue plunged 12.4% compared to the same quarter last year. Analysts expect that Deere & Company will post 7.61 EPS for the current fiscal year, according to Zolmax.

“The Zacks Consensus Estimate for Deere’s earnings per share is pegged at $1.35 for the fiscal fourth quarter, suggesting a 36.9% year-over-year plunge. The Zacks Consensus Estimate for total revenues is pinned at $7.23 billion for the period, indicating a year-over-year decline of 16.9%. The company has a trailing four-quarter average earnings surprise of 36.18%,” noted analysts at Zacks Research.

Deere & Company’s shares closed 1.16% higher at $258.56 on Friday

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 25

Ticker Company EPS Forecast
UU United Utilities £29.36
SMTC Semtech $0.46
PVH PVH $0.17
AUOTY AU Optronics $0.09
TRNO Terreno Realty $0.36

Thursday (November 26)

Ticker Company EPS Forecast
BVIC Britvic £19.24
ASEKY Aisin Seiki Co $0.42
SVT Severn Trent £68.16
GEBHY Genting Berhad -$0.07
RLAY Relay Therapeutics Inc. -$0.32

Friday (November 27)

No major earnings scheduled for release.

Deere’s Shares Hit All-Time High on Strong Earnings Forecast; Buy with Target Price $235

Deere & Company, the world’s largest makers of farm equipment, forecasts net income to be about $2.25 billion for the full year after the company reported net income of $811 million, or $2.57 per share for the third quarter, sending its shares up over 6% to a record high of $202.81.

However, many uncertainties remain regarding the effects of the global COVID-19 pandemic that could negatively affect the company’s results and financial position in the future.

Agricultural, construction and forestry equipment manufacturer said for the first nine months of the year, net income attributable to Deere & Company was $1.993 billion, or $6.30 per share, compared with $2.532 billion, or $7.87 per share, for the same period last year. Quarterly profit came in at $2.57 per share and equipment sales fell 12.4% on a year-on-year basis.

Deere said its worldwide net sales and revenues decreased 11%, to $8.9 billion, for the third quarter of 2020 and declined 12%, to $25.8 billion, for nine months. Net sales of the equipment operations were $7.9 billion for the quarter and $22.6 billion for nine months, compared with $8.9 billion and $26.2 billion last year.

“We believe DE’s 3Q is beginning to show the potential around the margin improvement program, aimed at driving 15% mid-cycle segment margins. We raise our numbers for FY21-23 but still only get to 13.8% segment margin by FY23. Achieving the 15% target by FY22 would add nearly $2.00 to our above-consensus estimate. A more robust replacement cycle could provide further upside,” said Stephen Volkmann, equity analyst at Jefferies.

Deere’s shares closed 4.39% higher at $199.50 on Friday. However, the stock gained 43% since late May and up over 15% so far this year.

Deere stock forecast

Fourteen analysts forecast the average price in 12 months at $189.38 with a high forecast of $235.00 and a low forecast of $154.00. The average price target represents a -5.07% decrease from the last price of $199.50. From those 14 analysts, nine rated “Buy”, four rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley target price is $181 with a high of $281 under a bull scenario and $63 under the worst-case scenario. Jefferies raised the price target to $230 from $200.

Other equity analysts also recently updated their stock outlook. Deere & Company had its price target increased by Goldman Sachs Group to $209 from $182. Deutsche Bank cut from a buy rating to a hold rating and set a $185.00 price objective for the company. BMO Capital Markets boosted their price target on Deere & Company from $150.00 to $235.00 and gave the stock an outperform rating in a report on Monday.

We think it is good to buy at the current level and target $235 as 50-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Analyst view

“DE is one of the highest quality, most defensive names within the broader Machinery universe, given an historically lower cyclicality of Ag Equipment and history of strong management execution. We like the ongoing Ag replacement cycle long term, although FY20 is likely to represent a pause in the Ag replacement cycle as US/China trade tensions, ASF and poor US planting all weigh on sentiment,” said Courtney Yakavonis, equity analyst at Morgan Stanley.

“With incremental commentary around cost normalization and benefits from voluntary separation/potential international footprint reductions, we see a combination of more supportive margins and relative defensiveness of Ag markets (in an increasingly choppy macro backdrop) driving a favourable risk-reward for FY20,” he added.

Upside and Downside risks

Upside: 1) Recovery in commodity prices and US cash receipts. 2) Better than expected Wirtgen top-line synergies. 3) U.S. infrastructure bills pass, driving outsized C&F growth – highlighted by Morgan Stanley.

Downside: 1) Commodity prices truncate ongoing replacement cycle. 2) Excess Used inventories limit pricing power and demand pull-through. 3) Mis-execution around Wirtgen synergies and $500b cost-cutting plan. 4) Supply chain woes and price/material headwinds persist.