J.P. Morgan Downgrades CVGI To Neutral, Raises PT To $19

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J.P. Morgan is downgrading Commercial Vehicle Group, Inc.
CVGI
to Neutral, but raises its PT to $19 from $18. “While we remain bullish on the Class 8 truck recovery and CVGI's EPS growth potential, the company's stock is up 85% in the past six months (vs. the S&P Machinery index up 42%) and the stock is trading at 22.6x our revised CY'11 EPS estimate,” J.P. Morgan writes. “With the recent stock rally, we think the stock is fairly valued and factoring in the bullish truck recovery. Typically, deeply cyclical machinery companies trade at ‘peak' forward P/Es of 7x to 8x on ‘trough' EPS and at ‘trough' forward P/Es of 22x to 23x on ‘peak' EPS. “We believe that investors should be willing to pay ~16x our CY'12 EPS estimate of $1.26 (from $1.21) to arrive at our $19 price target (up from $18), reflecting multiple compression towards mid-cycle, discounted back to YE 2011.” Commercial Vehicle Group currently trades at $19.01.
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Posted In: Analyst RatingsCommercial Vehicle GroupConstruction & Farm Machinery & Heavy TrucksIndustrialsJ.P. Morgan
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