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Investing.com - Bernstein has raised its price target on PACCAR (NASDAQ:PCAR), a prominent player in the machinery industry with a market capitalization of $52.6 billion, to $118.00 from $107.00 while maintaining an Outperform rating. According to InvestingPro data, the company maintains strong financial health with a GOOD overall score.
The upgrade follows PACCAR’s second-quarter earnings report, which showed earnings of $1.37 per share, exceeding consensus estimates by 7%. Both top-line performance and profitability surpassed expectations. The company has demonstrated consistent shareholder returns, maintaining dividend payments for 55 consecutive years.
While PACCAR’s third-quarter Truck, Parts & Other (TP&O) margin guidance of 13% came in 60 basis points below market expectations, management expressed confidence that the third quarter marks the trough of the current cycle.
Bernstein identified several potential catalysts that could drive upside beyond the company’s base case, including continued exit of truckload capacity from the market, bonus depreciation benefits from the OBBBA legislation, clarity on EPA emissions standards, and possible relief from current tariff impacts.
The firm noted that tariffs currently represent approximately a $75 million or 120 basis point headwind to third-quarter TP&O gross margin, suggesting room for upward estimate revisions for 2025 and 2026 if market conditions improve.
In other recent news, PACCAR Inc. reported impressive financial results for the second quarter of 2025, with earnings per share reaching $1.37, surpassing the forecast of $1.29. The company’s revenue also exceeded expectations, coming in at $7.51 billion compared to the anticipated $7.03 billion. Despite the strong earnings, PACCAR experienced a 15% year-over-year decline in consolidated revenue, with truck deliveries falling by almost 18% across all geographic markets. The U.S. market saw the steepest decline, with deliveries dropping by 20%.
In light of these developments, UBS upgraded PACCAR’s stock rating from Sell to Neutral and increased its price target to $100.00 from $81.00, noting that the company’s downside volume and margin catalyst had played out. Similarly, Freedom Broker raised its price target on PACCAR to $90.00 from $87.00, maintaining a Hold rating on the stock due to strong parts sales. These recent developments reflect the mixed performance and strategic adjustments PACCAR is navigating in the current market environment.
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