Jefferies Comments On PACCAR 1Q EPS

According to Jefferies, PACCAR

1Q EPS of $0.53 was $0.04 better than consensus as revenues beat and incremental margins surprised to the upside. Jefferies said that commentary on pricing and margins was positive and it continues its Buy rating and $65 price target. “Our price target of $65 is based on 120% EV/Sales on our 2012E discounted back. It also equates to a 12x multiple on potential earnings power of $5.50. A slower than expected economic recovery that further delays order improvement could pressure the shares. The vertical integration strategy carries some execution risk if engine timing or performance fail to meet expectations.” PACCAR closed yesterday at $52.19.