Market Overview

Analyst: Cummins' Earnings Visibility Clouded By Overhang, Peaking End Markets

Share:
Analyst: Cummins' Earnings Visibility Clouded By Overhang, Peaking End Markets
Related CMI
10 Biggest Price Target Changes For Thursday
Benzinga's Top Upgrades, Downgrades For October 4, 2018
Stock Yards Bank & Trust Co Buys Stryker Corp, Analog Devices Inc, Eli Lilly and Co, Sells ... (GuruFocus)

Ongoing uncertainty in a product campaign could act as an overhang on Cummins Inc (NYSE: CMI)’s earnings, according to Buckingham Research Group. 

The Analyst

Buckingham's Neil Frohnapple downgraded Cummins from Buy to Neutral and lowered the stock’s price target from $205 to $160.

The Thesis

Cummins incurred a $187-million charge in the first quarter related to a “previously disclosed product campaign," Frohnapple said in a Wednesday note. 

A final resolution could take up to six months, with the charge acting as an overhang on earnings for another two quarters, the analyst said. 

The engine manufacturer reported a Q1 adjusted EPS of $3.30 against a $2.89 estimate and sales of $5.6 billion versus a $5.14-billion estimate on Tuesday. 

Several of the company’s end markets, such as Class 8 trucks and light- and medium-duty trucks, are close to their peak, according to Buckingham. 

“As a result, we believe the risk-reward profile is more attractive for other industrials with greater earnings visibility and more cyclical upside such as Caterpillar Inc (NYSE: CAT) or more meaningful company-specific growth initiatives such as Meritor Inc (NYSE: MTOR),” Frohnapple said. 

Price Action

Cummins shares were down 4.67 percent at $146.12 at the close Wednesday. 

Related Links:

Barclays Constructs A Bullish Call On Caterpillar, CNH Industrial And Others

Barron's Picks And Pans: Cummins, US Bancorp, US Energy Stocks And More

Photo by Travelarz/Wikimedia. 

Latest Ratings for CMI

DateFirmActionFromTo
Oct 2018Stifel NicolausMaintainsBuyBuy
Oct 2018Bank of AmericaMaintainsNeutralNeutral
Oct 2018PiperJaffrayUpgradesNeutralOverweight

View More Analyst Ratings for CMI
View the Latest Analyst Ratings

Posted-In: Buckingham Research Group Neil FrohnappleAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (CAT + CMI)

View Comments and Join the Discussion!
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Assessing Interest Rate Risk In A Low Volatility ETF

With Its All-In-One Portfolio Tracker, Fintech Awards Finalist Sharesight Has Its Sights Set On Benzinga Gold