Investing.com -- Goldman Sachs downgraded CNH Industrial to Neutral from Buy on Monday, cutting its 12-month price target to $10.50 from $12.00, saying the agricultural and construction equipment maker’s stock is fairly valued after a period of strong outperformance.

The downgrade came alongside Goldman’s broader review of Europe’s capital goods sector at the tail-end of the first-quarter 2026 reporting season. The sector’s performance was mixed, with strong order growth driven largely by AI and datacenter spending, but widespread misses on sales and margins.

CNH had gained roughly 17% since Goldman upgraded it in January 2026, outpacing the bank’s multi-industry coverage average of 6.3%. But the analysts said that rally, fueled by hopes of normalized inventories and a soft commodity price recovery, has run its course.

“We now believe the stock is fairly valued as the market contends with persistently low North American agricultural demand amidst macro volatility and higher fertilizer prices,” as well as higher-than-expected tariff headwinds and a stalled recovery in European construction, a team led by Daniela Costa wrote.

They also noted that CNH’s first-quarter earnings missed consensus EBIT estimates by more than 50%, yet the stock rose 8% since. Goldman cut its 2026 and 2027 EBIT estimates for CNH by 7% and 19%, respectively, putting it 24% and 19% below consensus.

On the broader sector, the analysts said the first-quarter season has been defined by unusually strong order growth — averaging 16% across capital goods companies — with 77% of the bank’s coverage beating on orders.

The AI-related ecosystem of datacenters, semiconductors, and utilities now accounts for more than 40% of Goldman’s capital expenditure tracker, up from less than 25% three years ago.

But that strength has not translated cleanly into sales, with roughly 69% of companies missing revenue expectations, as the conversion of orders to sales is taking longer than historical norms.

About half of the companies also missed margin expectations, with renewed commodity and input cost pressures cited as a contributing factor. After a period in which companies seemed reluctant to raise prices following years of strong inflation, Goldman said that companies like Assa Abloy, Legrand, and ABB are now guiding for price increases this year.