Jefferies has downgraded Deere & Co to Underperform, arguing that the stock already reflects a full farm cycle recovery despite declining U.S. farmer incomes. The firm set a $550 price target based on 15 times peak earnings projected for 2029, suggesting limited upside from current levels. Shares fell more than 1% in premarket trading.

Jefferies believes the market is discounting a next-cycle earnings peak of about $50 per share in 2027 or 2028, representing a 45% increase from the 2023 peak of $34.50. The brokerage's own forecast pushes that earnings peak out to 2029, indicating a slower recovery than investors expect. While Deere remains one of the highest-quality names in machinery with strong product innovation and market penetration, Jefferies argues the valuation already assumes both a full recovery in volumes and higher multiples.

The agriculture cycle is expected to trough this year, but a sustained rebound depends on improving farmer incomes, which the USDA projects will fall about 15% in 2026. Lower crop prices, higher input costs, trade volatility, and elevated debt levels are weighing on farm economics and equipment demand. High-horsepower equipment sales in North America have declined for 29 straight months and are down about 39% from the 2023 peak, with past downturns lasting longer than the current one.