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February 19, 2021 11:15 AM, EST

Deere Surges With Farmers Signaling Best Year Ever

Deere equipmentLuke Sharrett/Bloomberg

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Deere & Co. lifted its earnings guidance above analyst estimates, with elevated crop prices and an improving farm economy signaling a record windfall for the biggest maker of agricultural machinery. Shares surged to an all-time high.

After a trade war and pandemic disruptions, Deere is betting that American farmers are finally ready to overhaul aging fleets as grain prices reach multiyear highs and agricultural profits soar amid a flood of government aid. Federal Reserve Bank of Chicago economist David Oppedahl called the agricultural outlook “the rosiest in years” based on a survey of bankers.

“Our results were aided by outstanding performance across our business lineup and improving conditions in the farm and construction sectors,” CEO John May said in the statement.

Net income for fiscal 2021 is forecast at $4.6 billion to $5 billion, the Moline, Ill.-based producer said in a statement Feb. 19. That compares with the $3.6 billion to $4 billion that Deere forecast in November, and the $4.06 billion average of analysts’ estimates compiled by Bloomberg.

For the fiscal year ended in November, net income was $2.75 billion.

The manufacturer has set a high bar for performance going into 2021, with its shares jumping 55% last year, the most since 2007. Improving farm fundamentals and sentiment will help drive double-digit revenue growth at Deere in 2021, according to Bloomberg Intelligence, which also cautioned that supply-chain disruptions and rising costs remain risks.

Deere shares rose as much as 10% to a record $330.25. The stock was up 9.4% in early morning trading in New York.

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