Jefferies Upgrades Cummins (CMI) to Buy, Raises Estimates Near Street High
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Jefferies analyst Stephen Volkmann upgraded Cummins (NYSE: CMI) from Hold to Buy with a price target of $325.00 (up from $250.00) after a bottom-up business review drives estimates to near Street-highs on better growth in China and broadly stronger US end markets. Longer term, CMI's recent medium engine wins with Daimler and Isuzu suggest its 'leave diesel to us' strategy can drive significant share gains in the mid-2020s and beyond.
The analyst stated "Investors have been concerned that CMI could lose share as global markets electrify and therefore a lower valuation multiple could be warranted. The company's response has been twofold: 1) significant investment and development of new powertrain technologies and 2) a strategy of 'let us handle the diesel' aimed at convincing customers to outsource more diesel and focus their own energy on new technologies. Cummins recently won two medium/light duty engine contracts with Isuzu and Daimler, including the complete outsourcing of Daimler's global MD engines to CMI over the next 3-5 years (Ex. 2). These deals alone could boost CMI's MD volumes by 20+% in 2025."
Shares of Cummins closed at $261.67 yesterday.
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