Tractor titan Deere & Company (NYSE: DE, Stock Forum) kicked off the week with an optimistic analyst note, with Wells Fargo upgrading the stock to "outperform" from "market perform." Furthermore, the analysts said the company's construction and forestry segments should benefit from higher demand and pricing, with the brokerage firm lifting its first-quarter earnings estimate to 85 cents from 60 cents per share. In addition, the brokerage firm said higher commodity prices should mean more cash for farmers, which should translate into bolstered equipment demand.
Sentimentally speaking, though, the upbeat analyst endorsement is merely a drop in the bucket for DE. According to Zacks, the equity has earned 13 "strong buys" and one "buy" rating, compared to eight tepid "holds" and not a single "sell." However, not everyone on the Street is so bullishly biased toward DE, as evidenced by lingering skepticism in the options arena.
More specifically, the stock's Schaeffer's put/call open interest ratio (SOIR) currently sits at a lofty 1.48, indicating that puts comfortably outnumber calls among options slated to expire within three months. Furthermore, this ratio registers in the 64th annual percentile, implying that short-term speculators have been more skeptically skewed toward DE only about one-third of the time during the past year.
On the charts, the shares of DE have plowed more than 38% higher during the past year, rallying atop their ascending 10-week and 32-week moving averages. What's more, the security could find an added layer of support thanks to the aforementioned abundance of bearish bets. More specifically, the December 70, 72.50, and 75 puts are home to more than 20,000 contracts combined, which could serve as options-related support in the short term.
From a contrarian perspective, the pessimism still plaguing the outperformer could actually work to DE's advantage. As the shares continue their long-term journey into the black, an unwinding of skepticism in the options pits could help the security mow even higher on the charts.
Disclosure: Andrea Kramer has no financial interest in any of the equities or products mentioned in this column.