Morgan Stanley bullish on machinery industry, upgrades stocks

Investing.com -- Morgan Stanley is bullish on machinery industry, raising sector rating to “attractive” for 2025, given the improved clarity on key equipment cycles.

Brokerage upgraded CNH Industrial NV (NYSE: CNH), and Timken Company (NYSE: TKR) to “overweight,” favouring these "value" plays for their de-risked profiles. Lifts target price on CNH to $16.5 from $11, while bumps Timken’s by $11 to $93.

MS said three themes will be driving 2025 performance, which includes equipment cycle positioning, valuations, and potential impacts of a Trump presidency. It prefers North American commercial vehicles and agricultural equipment, while construction equipment remains the most challenged.

Morgan Stanley (NYSE: MS) kept Cummins (NYSE: CMI), Paccar (NASDAQ: PCAR), Wabtec, Deere (NYSE: DE), and Martin Marietta at “overweight,” while staying “underweight” on Caterpillar (NYSE: CAT), Terex (NYSE: TEX), Lincoln Electric, and Donaldson.

The note also flagged macro and geopolitical risks tied to a Trump presidency, including trade uncertainty, inflation, and a strong U.S. dollar. However, Morgan Stanley sees rental equipment firms like United Rentals (NYSE: URI) and WSC and aggregates players Martin Marietta and Vulcan as well-positioned under Trump, given their U.S.-focused sales and pricing power.

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