Deere (NYSE:DE), AGCO (Nasdaq:AGCO) Look Strong on Ag Secular Growth Trends

Citing a continuous solid secular growth trend in agriculture, Barclays (NYSE:BCS) sees Deere (NYSE:DE) and AGCO (Nasdaq:AGCO) doing well in 2011 as machinery spend accelerates.

Barclays said, "On Friday, we attended AgConnect in Atlanta, GA and came away with increased conviction around the outlook for North American ag equipment spend, which we think could be up MSD in FY11, possibly better. This view represents upside to the flat end market outlook from both DE and AGCO. OEs noted solid backlog levels driven by strong crop prices and highly constructive farmer economics. Given the solid demand picture, the OEs sounded comfortable with their ability to put thru price increases in the 5-7% range for IT4 equipment.

"We continue to like the long-term secular growth trends in the ag end market: These include changing dietary trends in the emerging markets, continued support from ethanol and increased mechanization of farming practices globally. We reiterate our Overweight rating on Deere (NYSE: DE) and our Equal Weight rating on AGCO Corp (Nasdaq: AGCO)."

Deere (NYSE:DE) was trading at $84.72, up $0.40, or 0.47, as of 2:48 PM EST. AGCO was trading at $52.09, up $0.11, or 0.21 percent.