Deere upgraded, AGCO added to Focus List at JP Morgan (NYSE: DE)

John Deere Tractors

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Deere (DE -1%) is upgraded to Neutral from Underweight with a $ 440 price target, raised from $ 355, at JP Morgan, put shares have pulled back after opening at an all-time intraday high of $ 437.98.

JPM analyst Tami Zakaria changes Deere’s rating after taking over coverage for Ann Duignan, believing “the ag upcycle will be extended through 2023 driven by current geopolitical events and high grain prices, along with ongoing supply chain constraints,” as reported by Barron’s.

Prices for corn, wheat and soybeans are soaring, partly due to Russia’s invasion of Ukraine, and the JP Morgan commodities team forecasts a 40% Y / Y drop in Ukraine corn production and that 20% of Ukrainian wheat planted this past winter likely will not be harvested this spring.

Zakaria also adds farm machinery peer AGCO (AGCO -0.2%) to JPM’s Focus List and upgrades Illinois Tool Works (ITW + 0.7%) to Overweight from Neutral while trimming her price target to $ 255 from $ 262, believing the company’s incremental margins should outperform as volumes pick back up.

Deere’s focus on precision agriculture will be “more sought after as farmers try to reduce costs and their machines help achieve that,” Barclays analysts said in recent days.

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