Shares of agricultural equipment maker Deere & Co. DE, -1.50% slid about 1.5% Monday, after BofA Merrill Lynch downgraded the stock to underperform from neutral following a disappointing earnings report and softer-than-expected guidance. Analysts led by Ross Gilardi lowered their stock price target to $150 from $175. “The set-up on agriculture into next year is very challenging, and there is no guarantee that FY20 is necessarily the bottom if US farmers respond with higher corn and soybean plantings,” they wrote. “Deere also seems late in cutting production on construction equipment.” The company’s agriculture and turf division is suffering from steadily eroding margins, offsetting the good news in precision agriculture, said the note. Agriculture and turf margins have fallen for five straight quarters, predating the large production cuts in North America in the second half of 2019. “Deere supposedly had worked through supply chain efficiencies earlier in the year, but continued to blame higher production costs and SG&A in FQ4,” said the note. “Now competitor CNH CNHI, -2.65% is getting a lot more focused on precision agriculture. End result, positive margin benefits of precision ag probably remain invisible to the casual glance until at least FY21-22.” Deere shares have gained 11% in 2019, while the S&P 500 SPX, -0.87% has gained 25%.