Al Root

How a stock reacts to management proclamations can say a lot about what investors are thinking.

Take agricultural machinery maker Deere. It hosted an investor event, laying out some bold targets. After an initial bout of euphoria, investors eased off.

The farming cycle appears to have investors down these days.

First, some good news. Deere is targeting 10% equipment sales growth between fiscal year 2025 and 2030. That implies $63 billion in sales by fiscal year 2030. Wall Street estimates don't extend that far, but analysts project about 8% growth between fiscal years 2025 and 2028.

What's more, operating profit margins can average 20% between fiscal year 2026 and 2030, up from 17% generated between 2020 and 2025. Wall Street projects average operating profit margins of about 15% for the coming three years.

Driving growth and profitability will be achieved in part by selling technology-enabled recurring services. AI-enabled machines can help farmers optimize planting to improve crop yields and reduce costs. Today, Deere has about 500 million "engaged acres," which they use to track progress. Think of that as farmers who use some of Deere's technology, beyond a traditional tractor, to improve farming outcomes. Management wants to grow that to 600 million acres by 2030, with 400,000 monthly digital users growing to one million by 2030.

Now the bad news, after trading to almost $489 a share, Deere stock was flat at $475.24 in afternoon trading, while the S&P 500 and Dow Jones Industrial Average were down 0.6% and 0.7%, respectively.

Management's goal looks aggressive and impressive, but investors appear to be taking a wait-and-see approach.

There is a good reason for that. Things have been tough for farmers lately. Deere's large agriculture equipment sales dropped 17% in fiscal year 2025.

Things are so bad down on the farm that President Donald Trump is slated to announce $12 billion in aid to the sector on Monday. Rising costs, trade uncertainty, and falling commodity prices have squeezed the sector.

Benchmark corn prices were about $4.40 a bushel on Monday, down from a recent peak of more than $8 in early 2022. Soybeans are less than $11 a bushel, down from more than $17 in 2022.

For now, investors are more worried about the here and now than thinking about how good things can be in 2030.

Barron's wrote positively about Deere stock in July, believing that the worst of the farming cycle was behind the company. That's proven to be too optimistic so far. Deere stock was just north of $500 a share at the time of the pick.

Write to Al Root at allen.root@dowjones.com

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December 08, 2025 14:18 ET (19:18 GMT)

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