Deere Downgraded to Sell on Valuation Fears After 42% Gain

Jefferies Issues Sell Rating Despite 42% Rally

On Monday, February 23, 2026, Jefferies analyst Stephen Volkmann downgraded Deere & Co. (DE) to Sell from Hold, even while increasing his price target to $550 from $475. The move signals that the stock's valuation has become excessive after shares gained 42% year-to-date, hitting a new 52-week high of $674.19 the previous week. Investors initially disregarded the bearish call, with the stock climbing 0.8% to $668.12 in early Monday trading. The stock's momentum was originally fueled by better-than-expected first-quarter earnings and an upgraded fiscal 2026 net income forecast, which the company raised to a range of $4.5 billion to $5 billion.

Valuation Reaches 34x Earnings as Farmer Economics Weaken

The primary driver for the downgrade is valuation. Deere's stock now trades at approximately 34 times expected forward earnings, a significant expansion from 24 times a year ago. Volkmann argues this multiple already prices in a strong cyclical recovery that may not materialize quickly. Despite calling Deere a "structural winner," the analyst pointed to fundamental weaknesses that challenge the current stock price.

Deere has observed volume declines for the last nine quarters... Still, retail sales continue to decline, and farmer economics remain weak. We note that historically [farming business] troughs have been extended.

— Stephen Volkmann, Analyst at Jefferies.

The last agricultural downturn lasted 43 months, from 2014 to 2017. While current corn prices of around $4.40 per bushel are above the 2017 lows of under $3.50, they are well below the 2022 peak of over $8, and farmers' input costs have also risen, pressuring profitability.

Analyst Consensus Lags Behind Stock's Ascent

The Jefferies downgrade brings the portion of analysts with a Sell rating on Deere to 7%, which is in line with the S&P 500 average. The majority, 52% of analysts, still rate the shares as a Buy. However, the rapid price appreciation has outpaced Wall Street's expectations. The average analyst price target for Deere stands at approximately $651, which is below its current trading price of $668.12. This suggests that while most analysts remain positive on the company's long-term prospects, there is a growing view that the stock may be fully valued in the short term.