Wolfe Research sees CNH stock flat 2027 outlook on commodity prices

Investing.com - Wolfe Research said CNH Industrial (NYSE: CNH) management expects an L-shaped recovery in agricultural equipment demand in 2027, with commodity prices remaining the primary obstacle to a stronger rebound.

Jason Omerza, CNH's vice president of investor relations, told the firm that early order intake for model year 2027 products is tracking at a similar pace to model year 2026. Management characterized the 2027 industry outlook as flat, with CNH's own sales benefitting from a roughly 4% tailwind as underproduction normalizes.

Commodity prices are the primary driver of farm income and equipment demand, management said. The checklist for recovery, including dealer new and used inventory levels, trade-in value convergence, commodity prices, and a positive farm income year, is largely intact except for commodity prices. Brazil remains cautious despite government financing programs, with management noting those are helpful but not catalysts for a meaningful recovery without commodity price improvement.

Europe is seen as a timing issue rather than structural, with dealer inventory builds in the second quarter expected to be worked down. CNH continues to have discussions with potential partners regarding its construction business.

Multiple outcomes remain possible for the construction strategic review and management noted no rush to reach a conclusion, Wolfe Research said.

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