Deere Still the Best Way to Play the Agriculture Boom; Maintaining Buy

5/15 - "Although DE’s unchanged 2008 net income outlook
(higher Ag revenue offset by cost/margin headwinds) takes some near-term momentum from the story, we continue to view the company as the best way to participate in an Ag cycle that we expect to remain strong, supported by rising farm income, elevated crop prices, and low crop inventories. We maintain our Buy rating and $94 target price."

"2Q08 EPS of $1.74 beat our $1.72 but trailed cons of $1.75, as better than expected Ag and C&CE margins (Ag incremental of 24.5% beat our 23.7%) offset equipment revenue of $7.47b that trailed our est by $200m. Net income of $764m compared w/ DE’s $700-$725m target...DE raised its FY08 net sales outlook to ~20% yr/yr vs. its previous +17%, including stronger Ag and an extra two pts of currency."

"We trimmed FY08 EPS to $5.10 from $5.15 as higher Ag revs are offset by lower ...