Deutsche Bank Starts Cummins (CMI) at Sell
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Deutsche Bank initiated coverage on Cummins (NYSE: CMI) with a Sell rating and a price target of $111. Analyst Nicole DeBlase sees sees $0.90 mid-cycle EPS downside for Cummins from this market share pressure.
"Cummins’ share of the NAFTA heavy-duty truck engine market has fallen 16ppts from peak, to 29%, but we see the potential for 14ppts of additional pressure over time, as PACCAR moves towards its 85% internal engine penetration goal. Moreover, Daimler is entering the NA medium-duty truck engine market with its DD5/DD8 platforms (DD8, the most viable competition with Cummins’ ISB engine, launches in 2018e), and this represents 16ppts of long-term market share risk (vs. 75% NAFTA medium-duty share guidance for 2016e). Combined, we see $0.90 mid-cycle EPS downside for CMI from this market share pressure; we do not believe consensus reflects this," said DeBlase.
Shares of Cummins closed at $126.16 yesterday.
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