Deere Falls As Goldman Goes To Sell

DOWNGRADE COMES AHEAD OF WEDNESDAY’S PROFIT REPORT

Goldman Sachs isn’t even waiting to see the gory details of the fiscal first-quarter results due out of Deere (DE). It’s slashed its rating on the farm-equipment giant to a ‘’sell,” suggesting the downturn in the agriculture business could last through 2010.

Farm incomes fell last year for the first time in a decade, as crop prices peaked near mid-year, and fell by as much as half for some products by the close of 2008. When crop prices retreat, farmers - not surprisingly - tend to spend less money on tractors and other capital equipment. It’s difficult to judge when spending by farmers has or will bottom out, leaving most analysts watching the equipment sector bearish about the near-term profit prospects.

The company itself has suggested that profits for the period will drop about 25% - that would take per-share results down to about 63 cents from the year-earlier 83% - though it suggested that sales would increase 7%. Analysts have been a little more pessimistic about revenue: consensus says sales will decline about 11% for the quarter. Deere shares have fallen another 6% ahead of Wednesday’s earnings release.