J.P. Morgan Raises Price Target on Navistar (NAV)

J.P. Morgan is out with an analyst note this morning where they reiterate their Neutral rating on shares of Navistar International

; they raised their price target from $48.00 to $52.00. JPM analysts cited the company’s most recent earnings report, which was better-than-expected. NAV reported EPS of $0.42, however reported EPS included $0.39/share Brazil tax recovery gains and -$0.02 of one-time restructuring vs. consensus -$0.05 loss. Management maintained its F2010 guidance of $2.75-$3.25 (mp $3.00) vs. prior consensus EPS of $2.88. Analysts had the following takeaways from the conference call: “1) Management pulled forward the tax benefits from Q3 into Q2 and the benefits were always included in guidance 2) Management will build and hold 2010 trucks to make sure they are good quality (we do not fully understand this rationale) 3) Management incentive costs have gone up with its last guidance increase 4) The company spent $13MM on the CAT NC2 JV and Mahindra this past quarter 5) In addition, the company spent $12MM on core NPI’s 6) Every core business is performing better than YA 7) Only 200 units of the J.B. Hunt 5000 unit order has been placed for delivery this year.” They closed by saying, “We maintain our Neutral rating on the stock given the significant market share risk in NAV’s Class 8 business in 2010 and beyond. While the stock looks “cheap” on forward estimated earnings (relative to its peers), the potential for negative earnings revisions remains high, in our view.”