Barclays Maintains an 'Overweight' on Cummins (CMI); 3Q11 A Bump in the Road, Longer-Term Thesis Intact
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Price: $291.99 +0.55%
Rating Summary:
10 Buy, 24 Hold, 3 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 15 | Down: 11 | New: 13
Rating Summary:
10 Buy, 24 Hold, 3 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 15 | Down: 11 | New: 13
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Barclays maintains an 'Overweight' on Cummins (NYSE: CMI) price target lowered $3 to $127.
Barclays analyst says, "Despite the negative reaction to CMI's 3Q earning report (stock down ~5% vs. S&P500 -2%), with several end markets positioned for continued growth and remaining room for margin improvement, we view our longer-term positive thesis on the stock as intact. We view CMI's 3Q11 results, which included a slight lowering of 2011 guidance to $17.5bn-$18bn revenue (from $18bn) and EBIT margin to 14.0%-14.5% (from 14.5%) as largely reflective of known weakness in specific end markets. In particular, demand slowed in Chinese truck and construction markets, as well as in Power Generation markets in India. Given that CMI noted some slowing in these markets at its August 15 analyst day, and with ongoing recovery in N. American truck markets (benefiting both CMI's heavy-duty truck engines and components businesses), we retain our favorable outlook on the stock."
"We are tweaking 2011/2012 EPS estimates to $8.80/$9.80, respectively, reflecting slightly lower full-year revenue and operating margins in both instances, with some offset in 2011 from the beat vs. our model in 3Q11."
For more ratings news on Cummins click here and for the rating history of Cummins click here.
Shares of Cummins closed at $93.81 yesterday.
Barclays analyst says, "Despite the negative reaction to CMI's 3Q earning report (stock down ~5% vs. S&P500 -2%), with several end markets positioned for continued growth and remaining room for margin improvement, we view our longer-term positive thesis on the stock as intact. We view CMI's 3Q11 results, which included a slight lowering of 2011 guidance to $17.5bn-$18bn revenue (from $18bn) and EBIT margin to 14.0%-14.5% (from 14.5%) as largely reflective of known weakness in specific end markets. In particular, demand slowed in Chinese truck and construction markets, as well as in Power Generation markets in India. Given that CMI noted some slowing in these markets at its August 15 analyst day, and with ongoing recovery in N. American truck markets (benefiting both CMI's heavy-duty truck engines and components businesses), we retain our favorable outlook on the stock."
"We are tweaking 2011/2012 EPS estimates to $8.80/$9.80, respectively, reflecting slightly lower full-year revenue and operating margins in both instances, with some offset in 2011 from the beat vs. our model in 3Q11."
For more ratings news on Cummins click here and for the rating history of Cummins click here.
Shares of Cummins closed at $93.81 yesterday.
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