Morgan Stanley has moved $AGCO from Equal-Weight to Underweight, trimming its price target to $75. The downgrade highlights rising concern over swelling inventory levels and underwhelming growth momentum, particularly in North America.
📦 North American inventories have ballooned to a nine-month supply—well above the six-month target. This overhang could lead to production cuts later in the year, potentially limiting AGCO’s ability to react to retail demand surges.
🕰️ Compounding the issue, the anticipated lift from AGCO’s new precision agtech platform, PTx Trimble, is arriving slower than expected. These delays are weighing on the company’s sales outlook and limiting near-term upside potential.
🚜 AGCO’s Fendt brand, which was expected to gain share in key markets, hasn’t yet lived up to the hype. Market penetration is lagging, raising questions about the company’s go-to-market execution and product positioning.
💸 On the bright side, AGCO continues to deliver shareholder returns with a solid forward dividend yield of 4.61%, well above the sector average. The company has paid dividends for 12 consecutive years, and its low payout ratio of just over 7% leaves room for flexibility.
🔍 While income investors may appreciate the dividend strength, the operational headwinds—particularly bloated inventories and slower-than-expected growth—make $AGCO a stock to approach with caution for now.