Deere's (DE) fiscal Q3 earnings beat came from stronger-than-expected performance in Small Agriculture and Turf, helped by lower production costs despite $200 million in tariff-related expenses, Truist said in a note Friday.

Tariffs have totaled $300 million year-to-date, and full-year cost estimates rose to $600 million, up from $500 million, due to higher rates on imports from Europe, India and metals, the investment firm said.

Deere reduced the high end of its full-year net income forecast by $250 million, partially offset by a lower expected tax rate of 19% to 21%, Truist said.

Management sees signs of recovery in Europe tractor sales and North American turf and compact equipment, but remains cautious on large agriculture demand heading into 2026, Truist analysts noted.

Deere expects North American sprayer sales to fall 20% in 2026, though it does not view this as a signal of broader weakness.

Analysts view 2025 as the bottom for earnings, with potential upside from improved pricing, cost control, and production alignment with retail demand, according to the note.

Truist said it has updated full-year EPS estimates to $18.30 for 2025, $21.85 for 2026, and $27.90 for 2027.

Truist maintained a buy rating for Deere and cut its price target to $602 from $619.

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