UPDATE: J.P. Morgan Upgrades Commercial Vehicle Group to Overweight, Reiterates $11 PT as Management Changes Bring a Fresh View to Strategy

In a report published Wednesday, J.P. Morgan analyst Michael Shlisky upgraded the rating on Commercial Vehicle Group CVGI from Neutral to Overweight, and reiterated the $11.00 price target. In the report, J.P. Morgan noted, “In March, CVGI announced that its president, CEO, and founder, Merv Dunn, will be retiring. New CEO Rich Lavin (formerly head of Asia Pacific for CAT) began work in late May; during the summer, additional changes were made to upper management, including the hiring of Geoff Petrich as managing director of Asia Pacific (formerly of CAT as well). Other current employees were realigned to product-centered leadership roles, including a new president of Global Agriculture, Construction, and Military; a new president of Global Truck & Bus; and a new president of Global Aftermarket and Structures. The previous presidents of North & South America, India & Australia, and China each retired. Finally, in September, CFO Chad Utrup announced his intention to leave the company on November 1; he will be replaced by Tim Trenary, formerly of privately-held ProBuild Holdings. Overall, while a significant change in leadership could lead to some near-term disruption and volatility, given management's long-term goal of diversifying away from North American and heavy-truck exposures, it is encouraging to see a new CEO with significant Asia-Pacific and off-highway experience join the company, in our view. Our conversations with management underscore its public statements that the new CEO will indeed focus more on organic growth; we believe given the CEO's resume and structural changes, the organic focus will be made in key Asian markets, as opposed to leveraged growth through acquisitions.” Commercial Vehicle Group closed on Tuesday at $8.65.