So, Deere & Co. (DE)—the company that makes those iconic green tractors—just told Wall Street something it really wanted to hear: things might not be getting worse anymore. The company delivered a stronger-than-expected fiscal first quarter and, more importantly, modestly lifted its outlook for 2026. In the world of cyclical industrial stocks, that's often the first whisper of a turn.

"While the global large agriculture industry continues to experience challenges, we're encouraged by the ongoing recovery in demand within both the construction and small agriculture segments," said John May, the company's chairman and CEO. "These positive developments reinforce our belief that 2026 represents the bottom of the current cycle and provides us with a strong foundation for accelerated growth going forward."

Translation: The big farm equipment market is still tough, but other parts of the business are picking up the slack. And if 2026 is indeed the bottom, well, the only way from the bottom is up.

The Analyst Stampede

Wall Street analysts, always on the lookout for a narrative shift, heard that loud and clear. RBC Capital Markets analyst Sabahat Khan said the results and outlook reinforce the view that the ag equipment cycle "may be nearing a bottom." RBC didn't just nod in agreement; they practically shouted from the rooftops, raising their price target on Deere to $736 from $541 and reiterating their Outperform rating.

Their reasoning? Improving earnings visibility and more confidence in Deere's longer-term growth path. It's a classic "the worst is behind us" upgrade.

The numbers backing this up show a company with momentum in some key areas. Overall, Deere's Equipment Operations saw net sales rise 17.5% year-over-year. Higher shipment volumes and a favorable foreign exchange rate did the heavy lifting, more than offsetting what the company called "muted pricing."

Digging into the segments tells the story of a two-speed recovery:

• Production and Precision Ag (the big farm stuff): Sales up a modest 3.1%.
• Small Ag and Turf: Sales climbed a much healthier 24.0%.
• Construction and Forestry: This was the star, with sales soaring 33.9%, driven primarily by higher volumes and those currency tailwinds.

The Tariff-shaped Cloud

It wasn't all clear skies and smooth rolling, though. Profitability took a hit. Operating margins for Equipment Operations declined by 184 basis points year-over-year to 5.9%, and management pointed the finger squarely at tariffs. They reiterated that they expect about $1.2 billion in direct tariff expenses for fiscal 2026. That's a real headwind, eating into the bottom line even as sales grow.

Despite that pressure, Deere felt confident enough to nudge its 2026 outlook higher across most of its portfolio. The only segments revised lower were South America tractors and combines. This updated guidance implies roughly a $375 million increase at the midpoint for Equipment Operations net income and about a $500 million improvement for operating cash flow. In other words, they see more money coming in the door.

Reading the Fields

What's the backdrop for all this? RBC's Khan described the agricultural environment as "steady" rather than "robust." Global crop production is stable, farm income expectations are improving modestly, and there are some supportive policy and demand signals—like China returning to buy U.S. soybeans.

Perhaps crucially, dealer inventory drawdowns through 2025 have helped better align what Deere produces with what actually sells at retail. Management's view is that if 2026 is the trough, then 2027 could see a healthier recovery as inventories eventually need replenishing.

On valuation, Khan's new $736 price target applies a roughly 32-times multiple to RBC's fiscal 2027 adjusted EPS estimate of $23.02. That's a premium multiple, but he argues it's justified by improving earnings quality and the potential for growth as the cycle finally turns upward.

The Bullish Bandwagon

RBC wasn't alone in getting more optimistic. The Street collectively decided it was time to re-rate Deere:

• UBS analyst Steven Fisher maintained a Buy rating and raised his price target to $775 from $535.
• Truist Securities analyst Jamie Cook reiterated a Buy and hiked her target to $793 from $612.
• Even Bank of America Securities, which maintained a Neutral rating, raised its price forecast to $672 from $502.

When targets jump by over $200 in a single day, you know the sentiment shift is real. It's the market betting that the cycle has indeed found a floor.

As for the stock itself, Deere shares were down slightly, off 0.54% at $658.42 at the time of the original report. Interestingly, even with that dip, the stock was approaching its 52-week high of $674.18. Sometimes, a little profit-taking after a big news day is just noise. The real signal is in those dramatically higher price targets from analysts who now see a path from the bottom back to growth.