KeyBanc Downgrades Oshkosh: 'Not An Easy Decision'

The upcoming catalysts for Oshkosh Corp OSK seem to be more negative than positive, including a deceleration in macro data, a possible aerial work platform decline next year and contraction in orders and backlogs, according to KeyBanc Capital Markets.

The Analyst

Steve Barger downgraded Oshkosh from Overweight to Sector Weight.

The Thesis

The downgrade was “not an easy decision,” since Oshkosh is better positioned than its peers in the machinery space, Barger said in a Friday downgrade note. (See his track record here.)

The company has exhibited solid execution and has the potential for some growth or at least stability from its non-access segments, the analyst said.

Oshkosh reported third-quarter EPS 27 cents higher than KeyBanc’s estimate and increased its 2019 guidance to $7.90-$8.10. KeyBanc raised its 2019 EPS estimate from $7.75 to $8.

The commercial, F&E and defense segments are unlikely to generate enough operating income growth in 2020 to offset the expected decline in the AE segment.

“We think decelerating macro data foreshadows challenges to orders, revenue growth, margins, and investor sentiment,” Barger said.

Oshkosh has no immediate catalysts for reacceleration, which could lead to order and backlog contractions, according to KeyBanc.