Gold prices steady ahead of Fed decision; weekly weakness noted
On Wednesday, Morgan Stanley (NYSE:MS) adjusted its stance on PACCAR Inc (NASDAQ:PCAR), moving from an "Overweight" to an "Equalweight" rating. The firm also revised its price target downward to $96.00 from the previous $126.00. The stock, currently trading at $88.82, has seen a significant decline of over 21% in the past year. According to InvestingPro data, four analysts have recently revised their earnings estimates downward for the upcoming period. The downgrade comes as the commercial vehicle market faces increasing challenges due to macroeconomic uncertainty, which has led to a cautious approach among market participants.
The analyst from Morgan Stanley noted that the freight industry’s outlook has weakened recently, affecting expectations for a recovery in the second half of 2025 and the potential for pre-buy activity. Despite these challenges, PACCAR maintains strong financial fundamentals with a healthy current ratio of 2.04 and has demonstrated remarkable stability by maintaining dividend payments for 55 consecutive years. Pre-buying, the practice of purchasing vehicles ahead of regulatory changes, is contingent on both the incentive and the financial capability to do so. While the upcoming EPA’27 engine requirements are likely to remain, the analyst expressed doubts about fleets’ financial ability and willingness to pre-buy given the uncertain economic climate.
As a result of these concerns, Morgan Stanley has lowered its earnings per share (EPS) estimates for PACCAR for 2025, which are now approximately 14% below the consensus. The firm’s revised outlook suggests that unit sales may stay limited in the near term. The analyst concluded that with the stock price already reflecting the likelihood of no pre-buy scenario, PACCAR’s shares are deemed to be fairly valued at this time, leading to a more neutral risk/reward balance.
PACCAR, known for manufacturing high-quality commercial vehicles, is now viewed with more caution by Morgan Stanley as the industry grapples with broader economic issues. The adjustment in the stock’s rating and price target reflects the firm’s recalibrated expectations for the company’s performance in the face of these headwinds. With a P/E ratio of 11.2 and annual revenue of $33.66 billion, InvestingPro analysis suggests the stock is currently fairly valued. For deeper insights into PACCAR’s valuation and 10+ additional ProTips, explore the comprehensive Pro Research Report available on InvestingPro.
In other recent news, PACCAR Inc reported its fourth-quarter 2024 earnings, revealing a slight miss on earnings per share (EPS), posting $1.66 against the expected $1.70. However, the company exceeded revenue forecasts, achieving $7.91 billion compared to the projected $7.57 billion. Despite the EPS miss, PACCAR’s stock saw a slight increase in pre-market trading, reflecting investor confidence in the company’s long-term strategy. In analyst updates, Melius upgraded PACCAR’s stock from Hold to Buy with a new price target of $120, citing the company’s strong balance sheet and growth potential. Similarly, JPMorgan raised its price target for PACCAR to $132, maintaining an Overweight rating, following discussions with PACCAR’s executives about market opportunities and margin improvements. Meanwhile, the Environmental Protection Agency’s reassessment of vehicle-emissions rules has raised concerns about potential impacts on 2026 earnings expectations for PACCAR and other industry players. As the company navigates these regulatory challenges, it continues to focus on innovation and market expansion, particularly in hybrid and electric vehicle technologies.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.