UPDATE: JP Morgan Upgrades Navistar International to Overweight on Profitability Outlook

JP Morgan upgraded Navistar International

from Neutral to Overweight and raised the price target from $23.00 to $45.00. JP Morgan said, "The most important takeaway from the call was the new CEO's comments on NAV's potential profitability in 1-2 years. Possible improvements include: 1) another step down in SG&A costs on the back of the current benchmarking project; 2) material cost improvements, initially on truck assembly and later on optimization of engine components; 3) a continued improvement in quality which should allow NAV to reduce its warranty accruals; and 4) manufacturing productivity gains when Garland is closed and Mexico and Brazil are optimized. If achieved, the Truck and Engine business in NA could generate an 8%-10% EBIT, for EPS of $5.00-$6.00 (JPMe)." Navistar International closed at $31.89 on Thursday.