Although Deere & Co. is reassessing its strategy and has a new chief executive, the farm equipment maker is unlikely to change its overall direction significantly, an analyst wrote Friday.
In a note to investors, Barclays Capital analyst Meredith Taylor wrote that "we see growing focus on emerging markets and other growth opportunities, but strong execution on (shareholder value added) and (operating return on operating assets are) likely to stay front and center." She reiterated her firm's "Overweight" rating on the stock and $50 price target.
"We have traveled with (Deere) management over the last few days, and came away with the view that while the company is in the midst of a 'strategic rethink' and under new leadership, major changes in direction are unlikely to come," she wrote.
Last month, Samuel R. Allen became top executive of the Moline, Ill.-based company, succeeding Robert W. Lane, who led the company for nine years.
Deere, the world's largest maker of farm equipment, continues to increase its focus on opportunities in emerging markets, most recently with a $25 million investment in assembly operations in Russia, she wrote.
The company did not provide an outlook for fiscal 2010, "but we think that management looks for mixed trends by geography."
Taylor wrote that her firm sees better trends in Latin America and likely continued headwinds in Europe. Management "looks for better cash receipts in (North America) to support spending trends, but we think production cuts suggest some caution," she wrote.
Deere has laid off hundreds of workers since the global economy deteriorated late last year, but it has avoided job cuts on the scale of those seen at other large manufacturers.
Deere managers remain comfortable with asset quality at the company's credit business, and headwinds associated with pre-funding could ease somewhat in fiscal 2010, according to Taylor.
Shares of Deere fell 82 cents, or 1.8 percent, to $45.10 in late afternoon trading.
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