Following the company's mixed July-quarter earnings report, our shares of agriculture equipment company Deere & Co. (DE) are down ever so slightly Friday, more than likely due to the robust backlog reported by the company. But that was tempered by prospects for further improvement in supply chain issues, production volumes and pricing realization in the coming quarters. That led Deere to guide its 2022 net income to $7 billion-$7.2 billion, which implies $2.1 billion to $2.3 billion in the current quarter vs. $1.3 billion in the year-ago one and $1.88 billion in the reported one.
As we've been discussing with members, the fundamental drivers for farm equipment remain solid with farmers taking advantage of higher crop prices and income to upgrade their equipment, increasingly with precision ag equipment. That has led Deere's order books for the remainder of the current fiscal year are full, and it confirmed robust demand into 2023 with some order books already full through the first half of next year. In particular, Deere is sold out on tractors well into the start of 2023.
As we saw in the July quarter's bottom line results that saw earnings per share miss consensus expectations, Deere, like many other companies, continued to feel the pain associated with supply chain and chip issues during the quarter. Other costs that weighed on profitability were elevated material and freight costs. But like Cisco (CSCO) and other companies, Deere saw some sequential improvement with more expected in the current quarter and beyond. That is leading production rates even higher on a sequential basis. Paired with greater price realization, margins should continue to improve as production volumes ramp. We'd also point out that Deere will start to anniversary some inflationary pressures this quarter and in the following one, which should lead to more favorable comparisons.
As we can see by the market's reaction to Deere's bottom line miss, it is giving the company a pass in favor of greener pastures ahead. We will do the same. Given the lingering impact of margin headwinds, we'll reduce our price target to $425 from $450, which offers enough upside to keep our "One" rating intact.