AGCO - AGCO profit estimate lowered by analysts at CFRA following Q3 report

AGCO ( NYSE: AGCO ) was kept at a Hold investment rating by analysts at CFRA Research, which cut its earnings estimates for the maker of agricultural machinery.

Following AGCO’s Q3 earnings report, CFRA reduced its 2022 adjusted EPS estimate for AGCO to $11.72 from $11.76, and its 2023 estimate to $12.92 from $13.31.

AGCO on Monday reported adjusted earnings for Q3 of $3.18 a share, beating estimates by 2 cents a share. Revenue grew 16% from a year earlier to $3.12 billion, missing the consensus forecast by $180 million.

CFRA forecast that AGCO, whose brands include Massey Ferguson, Challenger and Fendt, will continue to grow its operating margin by raising prices to help offset higher material and freight costs. AGCO said its operating margin expanded by 140 basis points from a year earlier to 10.6% in Q3.

“Supply chains remained pressured during the quarter, requiring AGCO to keep elevated levels of raw material and work-in-process inventory on hand,” Jonathan Sakraida, an analyst at CFRA Research, said in the report. “We anticipate pricing benefits continuing in Q4 and into 2023, driving additional Y/Y margin expansion.”

CFRA cut its 12-month price target for AGCO to $134 a share from $138 a share, which is a multiple of 10.4 times the researcher’s 2023 earnings forecast.

AGCO's stock this year had risen 3.4% through the end of Nov. 1, contrasting with a 14% slump for the S&P 400 mid-cap stock index ( SP400 ).

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