Wachovia Downgrades Cummins (CMI) to Market Perform

October 3, 2008 8:37 AM EDT

Wachovia downgrades Cummins Inc. (NYSE: CMI) to Market Perform and lowering valuation range to $43-46 from $83-86.

Wachovia analyst says, "We are decreasing expectations for a variety of reasons. This stock remains one of the best earnings growth ideas in our universe given its exposure to beaten down cyclical markets in N America (truck, Dodge Ram and RV) that could begin to recover late 2009. However, we expect yr/yr earnings growth to be flattish in H1 2009. Combining this with the general market multiple compression, we view the stock as having limited upside in the near-term...The stock has realized a significant multiple compression due to various factors (both fundamental and non-fundamental). With concerns about a global recession taking shape and a potentially more muted recovery than initially expected, we now expect upside to be relatively limited and are stepping to the sidelines."

Cummins Inc. designs, manufactures, distributes and services diesel and natural gas engines, electric power generation systems and engine-related component products, including filtration and exhaust aftertreatment, fuel systems, controls and air handling systems.

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