By Alison Martin

Deere and Co.’s first quarter earnings handily beat analyst expectations Friday, but Deere shares came under pressure after the agricultural-equipment giant dismayed investors with a downbeat full-year forecast.

In the quarter ended. Jan. 31, the maker of iconic green-and-yellow tractors reported its net income of $254.4 million, or 80 cents per diluted share, a 34 percent decline from 2015’s first quarter net income of $386.8 million, or $1.12 per share.

Revenues fell by 13 percent to $5.525 billion from $6.38 billion in last year’s quarter.

Deere’s per-share earnings topped by 9 cents the 71 cents analysts had been expecting.

“John Deere’s first-quarter results reflected the continuing impact of the downturn in the global farm economy as well as weakness in construction equipment markets,” said chairman and CEO Samuel R. Allen said in a company press release.

“At the same time, all of Deere’s businesses remained solidly profitable,” he said, “benefiting from the sound execution of our business plans and the success of actions to develop a more responsive cost structure.”

With commodity grain prices dropping and farm incomes across the globe remaining stagnant, the company expects a lesser demand for new equipment, especially its higher-horsepower models.

Deere also warned investors that it now expects full-year 2016 sales to decline by 10 percent, a deeper falloff than the 7 percent decline officials had projected in late autumn.

Investors didn’t like the news: In mid-afternoon New York Stock Exchange trading Friday, Deere shares were down $2.95, or 3.7 percent, at $77.38. Analyst Kwame Webb of Morningstar, Inc., however, isn’t worried just yet.

“We continue to have a high degree of confidence in Deere’s longer-term prospects,” Webb said, “but shares would have to trade below $73 before beginning to look undervalued in our opinion.”

Unfavorable currency-exchange rates are also playing a role. In the U.S. and Canada, Deere saw an 18 percent decrease in sales, but in international markets the company saw a 9 percent decrease in net sales, due in part to the dollar’s strengthening over the last year.

Deere & Co’s EPS by Quarter

[field name=”chart”]

Deere did manage to cut its costs and expenses compared to this time last year. Its costs and expenses totaled $5.17 billion, down from 2015’s $5.82 billion.

Strong planting and harvesting seasons, favorable weather and a higher demand for agricultural products could positively impact Deere’s financial outlook over the course of the year.

Deere’s stock has yet to recover from its painful drop in August 2015, when its shares plunged from $97.14 to $79.09 over a span of 15 days, during which the company announced it would be cutting workers at plants in Illinois, Iowa and Kansas.