Deere's (DE) management expects 2026 to mark the bottom of the agriculture cycle, with recovery likely to be affected by commodity prices and input cost trends, while demand trends in Construction & Forestry remain supportive, RBC Capital Markets said Friday, following investor meetings with management.

RBC believes the setup for 2027 is "interesting," with 2026 reflecting multi-year low volumes, healthy new and used inventory levels, and a relatively improved tariff situation, according to the note Friday.

While inventory is in good shape and shipments are generally matching dealer sales, the Iran conflict and resulting input cost volatility are likely impacting sentiment, the brokerage said.

Construction & Forestry volumes are just above mid-cycle levels and demand is tracking well, driven by roadbuilding, civil infrastructure, and data centers, partially offset by residential weakness. Dealer backlogs remain healthy, and an imbalance between demand and supply could create a channel fill opportunity in 2027, according to the note.

RBC kept an outperform rating on Deere with a price target of $752.

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