02/15/24 01:02 PM EST

FLASHBACK | "A Great Short" Deere Down Again

After reporting earnings today, the stock price for Deere (DE) fell more than 5%. The ag manufacturer is now down 18% from its July 2023 highs.

Yet another down day for one of Hedgeye Industrials' longest-standing short calls.

"All the factors that drive their business are turning against them," Industrials analyst Jay Van Sciver warned investors yesterday on The Call @ Hedgeye. "Commodity prices have been under pressure; used equipment prices have also seen a lot of pressure."

Those concerns came through in this morning's 1Q earnings call. Watch Van Sciver's analysis in this clip from today's episode of The Call @ Hedgeye.

"It's not a good report," Van Sciver said today. "Even though the headline beat is there, it's mostly on price. And it's because dealer inventory is up to a multi-year high, which is kind of, I guess, the manufacturer equivalent of like putting stuff in the channel. They're also taking down guidance."

"You can't make people buy tractors. There has to be an economic need for people to buy. And if the commodities are at low prices, there is no justification for their return."

"You have to have a global macro framework to cover Deere effectively and model it," Keith McCullough added. "We’re doing that, and Jay's done a great job with it. It’s been a great relative short."

Deere is among the top 10 on McCullough's signal strength shorts, which ranks tickers based on time held.

But not everyone has shorted the cyclical industrial company with conviction. In November, Van Sciver was the only analyst to nail short Deere call on a day the stock fell 6%.

We remain short and believe the stock will still fall significantly from here.

"The same dynamics that took Deere and land prices – the whole upcycle – can unwind over a multi-year period," Van Sciver said today. "And we think we're in that multi-year period here."