Sandy Pomeroy is bullish on Deere after a strong Q3

Deere & Company (NYSE: DE) is down 4.0% this morning even though it reported solid results for its third financial quarter.

Deere raised its guidance as well

The price action is particularly interesting considering the agricultural equipment manufacturer raised its guidance for the full year as well.

Deere now forecasts its net income to fall between $9.75 billion and $10 billion in fiscal 2023, as per the press release. Its previous guidance was for up to $9.50 billion.

Note that the New York listed firm currently pays a dividend yield of 1.24%. According to Sandy Pomeroy of Neuberger Berman:

Why is Deere stock trading down today?

Deere stock is in the red today perhaps because investors are concerned if the ongoing increase in demand can sustain moving forward.

Note that crop prices are now moderating in the United States. What it means for farmers is less flexibility in terms of buying new gear.

Net farm income is expected to decline by 20% this year to $151 billion, as per the U.S. Department of Agriculture. Still, the Senior Portfolio Manager of Neuberger Berman said on Friday:

Deere Q3 earnings snapshot

• Earned $2.98 billion versus the year-ago $1.88 billion
• Per-share earnings also went up from $6.16 to $10.20
• Revenue jumped 12% year-on-year to $15.80 billion
• Consensus was $8.22 a share on $14.14 billion revenue

Deere also said that it concluded the recent quarter with a strong order book. On CNBC’s “Squawk on the Street”, Neuberger’s Pomeroy noted: