Macquarie Finds Plenty Of Reasons To Like Paccar

Truck manufacturer Paccar Inc PCAR is "uniquely positioned" to take advantage of ongoing, robust industrywide fundamentals and a strong economy, according to Macquarie Research.

The Analyst

Analyst Sameer Rathod upgraded Paccar from Neutral to Outperform with a price target lifted from $70 to $75.

The Thesis

The case for bullishness on Paccar's stock is based on expectations for the company to take advantage of favorable trends such as truck tonnage, utilization and rate per mile — all of which continue to be "robust," Rathod said in the upgrade note. (See the analyst's track record here.) 

The trucking industry stands to benefit from the surging economy, and Macquarie economists now forecast second-quarter annualized real GDP to rise 3.5 percent versus a prior estimate of 2.9 percent.

Firsthand visits at Paccar's Silicon Valley-based "Innovation Center" left the analyst with "increased confidence" that the company is appropriately focused on both autonomous and electric themes, Rathod said. Other firsthand checks and conversations with "several large names" in the auto group reveal they are using Paccar-branded trucks for their testing, the analyst said. 

A proprietary analysis of used Paccar trucks paints a bullish picture for the stock, the analyst said. Paccar-branded trucks sold at auctions rose 20 percent in value in the past month, while the industry as a whole fell 2 percent, according to Macquarie. This may suggest a shortage of new trucks — a "positive driver" for the company.

Price Action

Paccar shares were trading higher by 1.6 percent at the time of publication Tuesday. 

Related Links:

The Bear Thesis For Truckers: Tesla To Conquer All

Deutsche Bank Revisits Machinery Group After Tariffs, Macro Shifts

Public domain photo via Wikimedia.