CFRA lifts Cummins stock price target to $385 from $345

On Tuesday, CFRA analyst Stewart Glickman adjusted the price target for Cummins Inc . (NYSE:CMI), a global power leader in diesel and alternative fuel engines, raising it to $385.00 from the previous $345.00. With the stock currently trading at $363.51 and a market cap of nearly $50 billion, InvestingPro analysis suggests the stock is fairly valued. Despite the increase, Glickman maintained a Hold rating on the company’s shares. InvestingPro subscribers have access to 10+ additional exclusive insights about CMI’s market position and growth prospects.

Glickman’s new price target is based on a valuation of 14.6 times the firm’s initiated 2026 earnings per share (EPS) outlook of $26.40. Currently trading at a P/E ratio of 24.1x, the stock has delivered an impressive 45.7% return over the past year. This adjustment comes even as CFRA lowered its 2025 EPS estimate for Cummins to $22.26 from $22.52, aligning with the company’s five-year historical average.

Cummins reported its fourth-quarter operating EPS at $4.54, which was $0.15 below the consensus. The company’s Q4 revenues fell by 1% year-over-year, though InvestingPro data shows a healthy overall financial health score of "GOOD." This decline was attributed to weaker performance in the Engine and Components segments, which saw decreases of 2% and 17% respectively. However, these declines were partially offset by strong performances in the Distribution and Power Systems segments, which grew by 13% and 22%, respectively. The robust results in these areas were driven by heavy demand from the global data center markets.

Looking forward, Cummins has projected a relatively flat growth environment for 2025, with expectations ranging from a 2% decline to a 3% increase. The company anticipates weakness in the North American on-highway truck markets, particularly in the first half of 2025. Nevertheless, it is expected that this weakness will be balanced by strength in the power generation markets.

Glickman notes that Cummins is likely to focus on maintaining the quality of its margins in the face of a mixed demand environment. This strategic emphasis on margin quality is seen as a response to the various market challenges and opportunities that the company anticipates in the near future.

In other recent news, Cummins Inc. reported mixed results for its fourth quarter, surpassing revenue expectations but falling short on earnings. The company’s fourth quarter revenue reached $8.45 billion, exceeding analyst estimates of $8.08 billion. However, adjusted earnings per share were $3.02, considerably lower than the $4.71 analysts had anticipated. This shortfall was attributed to charges related to restructuring its Accelera segment, which focuses on zero-emissions technology.

For the full year 2024, Cummins reported a record revenue of $34.1 billion, equal to the previous year. The company’s net income rose significantly to $3.9 billion, a substantial increase from $735 million in 2023. This surge was primarily driven by a $1.3 billion gain from the separation of its Atmus filtration business.

Looking forward, Cummins has projected its 2025 revenue to range from a decrease of 2% to an increase of 3% compared to 2024. The company also expects EBITDA margins to be between 16.2% and 17.2% for the year. These recent developments reflect the company’s ability to generate sales despite challenges in certain key markets.

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