UPDATE: BMO Downgraded Deere

In a report published Monday, BMO Capital Markets analyst Joel Tiss downgraded the rating for Deere & Company (NYSE: DE) from Outperform to Market Perform and cut the price target to $84.

Tiss initiated FY15 and FY16 EPS estimates of $7.00 and $6.50, respectively. BMO cut the rating due to the "inevitability of a cyclical downturn." The analyst noted that these estimates are more directional as unpredictable factors from the weather, government financing/ tax incentives, and global planted acres act as headwinds for the company. BMO added that there is "very little pent-up demand" for equipment sales. The analyst remained optimistic on Deere's EPS resilience due to global diversification and the successful implementation of a build-to-demand manufacturing model and therefore cannot justify an Underperform rating. Tiss noted the globalization of its Construction & Forestry segment and the billions in sales in Brazil and Russia/ FSR with little acquisition through greenfield investment.

Deere reported Q4 EPS of $2.11 ahead of BMO's $1.88 and consensus of $1.89. FY EPS was $9.08, an all-time high. The company had $35 billion in equipment sales, up 4.5%, and the operating profit up 14.4%. Total sales reported was $37.8 billion with net income of $3.54 billion.

Deere & Company closed at $84.77 on Friday.