UPDATE: BofA/Merrill Lynch Cuts Joy Global (JOY) to Underperform, Slashes EPS Estimates on Demand Weakness, RMB Devaluation (CMI)

(Updated - December 1, 2015 10:14 AM EST)

BofA/Merrill Lynch downgraded Joy Global (NYSE: JOY) from Neutral to Underperform with a price target of $10.00 (from $21.00). EPS estimates were slashed to $0.80 and $0.60 (from $1.20 and $1.50) for FY15 and FY16.

The change comes amid bleak global coal and industrial metal outlook. In addition, BofA/Merrill Lynch's FX strategists expect China to devalue the RMB by up to 10% in 2016. Given these headwinds, analysts expect Joy's dividend to be reduced and eventually eliminated.

Commenting on RMB devaluation risk, analyst Ross Gilardi said, "Our global currency strategist David Woo thinks the August 11th RMB devaluation was just the tip of the iceberg, and sees the RMB declining as much as 10% against the USD in 2016. Needless to say, this scenario would be very bearish for emerging markets, commodities, the Machinery sector, and Joy Global."

BofA/Merrill Lynch also downgraded Cummins (NYSE: CMI) to Underperform with a price target of $90. Analysts citing similar RMB devaluation concerns and a weakening U.S. truck market.

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

Shares of Joy Global closed at $15.35 yesterday.

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