Baird Just Upgraded Deere Stock. Here's Why.

Baird's senior analyst Mircea Dobre has upgraded Deere stock to "Outperform" and raised the price target to $800. This indicates a potential upside of about 23% from the current level. Dobre's bullish outlook is based on an anticipated recovery cycle in agricultural equipment demand. He believes that improving grain and oilseed prices will boost farm profitability and cash flows, making the conditions more favorable for equipment spending.

As balance sheets of farmers strengthen, capital expenditures on heavy machinery are expected to increase over the next two years. Additionally, Dobre points to Deere's operational excellence, pricing discipline, and high-margin product mix as contributing factors to his positive outlook. The company's software-as-a-service (SaaS) and pay-per-use recurring revenue models are also expected to drive normalized earnings power toward the mid-$30s by 2028.

Deere pays a dividend yield of 1%, adding to its attractiveness. Other analysts also maintain a positive view on Deere shares, with the consensus rating at "Strong Buy" and a mean price target of $665.