Should you buy Deere & Co. after a 14% dip following missed Q2 earnings?

Deere & Company (NYSE:DE) closed 14% lower on Friday after missing Q2 earnings estimates. The company’s reported net sales of $12.03 billion were lower than estimates of $13.16 billion. The net sales were above last year’s $11 billion. However, other key parameters came strong for the agricultural equipment manufacturer.

Deere’s net income was $2.098 billion, an increase of 17% from the prior year. The company also upgraded the FY22 net income to a range of $7.0 billion to $7.4 billion. EPS was $6.81, higher than $5.68 in the prior and $6.69 estimates. The guided income was higher than the company’s previous estimates of $6.7 billion and $7.1 billion.

Why did the stock then fall?

Investors decided to focus on the net sales of Deere which came short. Already, investors’ concerns are high that growing stagflation fears could stifle Deere growth. Despite higher guidance in FY22, an economic meltdown could pose a headwind to hitting the projection. The investors took note of CEO John May that supply chain issues were affecting the company. Consequently, sales growth rather than earnings is key for a heavy equipment manufacturer like Deere.

Deere crashes below $330 support

Technically, Deere entered the bearish momentum after breaking below a key support at $330. We project further downside of the stock unless it quickly reclaims $330 level. The next established support is at $131. However, the stock could reverse at potential levels of $245 and $181. What we insist now is that the stock will continue to fall, and investors should keep off.

Summary

Deere will continue to fall after breaking below $330 support. The missed net sales added the bearish pressure. Investors should wait for the stock to settle at a support zone before buying.