Wells Fargo Upgrades PACCAR (PCAR) to Outperform

February 1, 2013 6:53 AM EST Send to a Friend
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Price: $61.40 +1.35%

Rating Summary:
    7 Buy, 11 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 24 | Down: 28 | New: 14
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Wells Fargo upgraded PACCAR (NASDAQ: PCAR) from Market Perform to Outperform and raised its valuation range from to $55-58 from $40-43.

The firm comments, "We are upgrading PCAR to Outperform from Market Perform. We have previously not been positive on the stock, because we thought consensus expectations were too high. We now believe that consensus expectations are about right for 2013 and too low for 2014. We are introducing our 2014E $4.20, 15% above consensus 2014E of $3.64. PCAR reported Q4 2012 yesterday (1/31), and we think investors were clearly disappointed in aspects of the Q4 2012 report and modestly lower Q1 2013 production guidance. The consequent sell-off reduced the stock’s year-to-date improvement to 4% compared to an S&P 500 increase of 5%. Despite the modest underperformance year to date, we believe that the stock likely will begin to outperform in front of 2014. We believe expectations are too low for 2014 given (1) markets bottoming with potential demand improvement in North America and Europe during 2013, (2) easier comparisons beginning in Q2 2013 due to absence of North American destocking actions, (3) exit from an extended new product investment phase (i.e., reduced R&D expense) that should help support margin improvement, and (4) incremental Brazilian market benefit beginning 2014. We are increasing our valuation range on increased multiples on expected 2013 performance in front of an anticipated substantial earnings reacceleration in 2014."

For an analyst ratings summary and ratings history on PACCAR click here. For more ratings news on PACCAR click here.

Shares of PACCAR closed at $47.06 yesterday.


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