Trump signs order raising Canada tariffs to 35% from 25%
On Monday, Citi updated its outlook on Cummins (NYSE:CMI), increasing the price target to $350 from the previous $320, while reaffirming a Buy rating on the shares. The revision comes after Cummins reported its first-quarter results, which led to adjustments in Citi’s financial models. With a current market capitalization of $42.25 billion and a P/E ratio of 15.26, InvestingPro data shows the company trading at attractive valuations relative to its growth potential. Analysts at Citi have revised the adjusted earnings per share (EPS) estimate for the year 2025 to $20.35, down from $21.20, accounting for the expected influences of tariffs and a decrease in North American truck estimates.
Despite the adjustments, Citi analysts expect Cummins’ earnings to grow by double digits in 2026 and 2027. This growth projection is supported by a forecasted recovery and margin expansion in the company’s core end-markets, along with consistent performance in the Power Systems segment. The company’s solid financial health, earning a "GOOD" rating from InvestingPro’s comprehensive analysis, suggests strong fundamentals to weather near-term challenges. Citi anticipates that Cummins will experience the majority of the tariff impact during the second and third quarters of the current year, as the company predicts a lag between price and cost adjustments.
Cummins is seen as well positioned to mitigate the effects of tariffs over the next six to twelve months. Strategies such as tariff pass-throughs, which involve adjusting pricing, are expected to help the company navigate the challenges. This expectation is further bolstered by the belief that tariffs may ease in the near future.
The decision to increase the price target to $350 is based on a higher earnings multiple, which reflects Citi’s confidence in Cummins’ long-term earnings growth and its path to achieving margin expansion. According to InvestingPro’s Fair Value analysis, the stock appears slightly undervalued at current levels, with 8 additional ProTips and extensive financial metrics available for deeper analysis. The firm’s analysts maintain a positive outlook on the stock, citing the company’s potential to overcome near-term headwinds and realize its growth targets.
In other recent news, Cummins Inc . reported a strong financial performance for the first quarter of 2025, with earnings per share (EPS) of $5.96, surpassing the analysts’ forecast of $5.02. However, the company’s revenue came in slightly below expectations at $8.17 billion, compared to the forecasted $8.24 billion. Despite the revenue shortfall, Cummins demonstrated a notable improvement in gross margins, increasing from 24.5% to 26.4% year-over-year. In addition, the Power Systems segment saw EBITDA surge 64% year-over-year to $389 million, driven by demand from data centers and efficiency gains. Cummins also completed a $2 billion public offering of senior notes, intended for general corporate purposes, including addressing existing debt. Meanwhile, BofA Securities raised Cummins’ stock price target to $326 from $313, maintaining a Neutral rating. This revision reflects Cummins’ strong performance, although the company withdrew its financial guidance due to trade tariff uncertainties, which analysts found surprising.
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