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On Monday, Citi analyst Kyle Menges revised the price target for Cummins Inc . (NYSE:CMI) shares, reducing it to $360 from the previous $430 while continuing to endorse the stock with a Buy rating. Menges cited a downward adjustment in commercial vehicle forecasts, influenced by recent reductions in ACT’s North American Commercial Vehicle Outlook. The revision was attributed to a slow start in the freight market this year. According to InvestingPro data, Cummins, with its market capitalization of $43.17 billion and P/E ratio of 11.07, currently appears undervalued based on its Fair Value analysis.
Menges noted that dealers are reporting a halt in orders from fleet customers who are awaiting further information on the Trump administration’s tariff policy and potential modifications to EPA regulations. Despite the downward revision, Cummins remains the only company within Citi’s commercial vehicle coverage to hold a Buy rating. Menges believes Cummins is well-equipped to manage potential downturns in the North American truck market, thanks to its diverse geographic and product exposure, as well as consistent pricing. InvestingPro analysis supports this view, highlighting the company’s strong financial health score and moderate debt levels, with a total debt-to-capital ratio of 15%.
The analyst pointed out that the new price estimates for Cummins and Allison Transmission Holdings Inc. (NYSE:ALSN) present less risk to the 2025 forecasts compared to PACCAR Inc. (NASDAQ:PCAR), whose estimates might face the most significant downside according to Citi’s analysis. However, it was mentioned that the revised estimates for Cummins and Allison are at the lower end of the companies’ guidance ranges for 2025.
Cummins’ position as a preferred stock within its sector is bolstered by its broad diversification. Menges emphasized that Cummins’ diverse portfolio across different regions and product categories provides a buffer against market volatility, which is a key factor in maintaining the Buy rating amidst a challenging economic environment. InvestingPro data reveals impressive fundamentals, including $34.1 billion in revenue and a 2.32% dividend yield, with the company maintaining dividend payments for 55 consecutive years. For deeper insights into Cummins’ financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The report reflects Citi’s cautious outlook on the commercial vehicle sector, particularly in North America, due to current market conditions and regulatory uncertainties. Cummins’ stock price target has been adjusted to align with these revised expectations, yet the company’s strong fundamentals support the analyst’s positive long-term perspective.
In other recent news, Cummins Inc. reported earnings of approximately $3.9 billion on sales of $34.1 billion in 2024. The company also announced a collaboration with Isuzu Motors Limited to introduce a new battery electric powertrain for the F-series medium-duty truck, set for production in 2027. UBS analysts recently lowered Cummins’ stock price target to $400 from $432, maintaining a Buy rating despite concerns over the North American truck market recovery. Cummins also unveiled its new X10 engine, designed for both heavy and medium-duty applications, featuring advanced digital technologies and aiming for a 2027 launch. Additionally, Chief Administrative Officer Sharon Barner is set to retire on May 31 after 13 years with the company. The Environmental Protection Agency’s reassessment of vehicle-emissions rules has raised concerns about potential impacts on Cummins’ 2026 earnings expectations. Cummins continues to navigate industry challenges while focusing on innovation and sustainability initiatives.
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