Sector Shifts: Bank of America Analyst Forecasts Challenging 2024 for Machinery, Downgrades Cummins and GFL, Upgrades PACCAR
Portfolio Pulse from Lekha Gupta
Bank of America Securities analyst Michael Feniger has adjusted ratings for companies in the machinery, E&C, and waste management sectors, anticipating a challenging 2024. The analyst predicts difficulty in EPS beats due to slow backlogs, moderating pricing, and inventory challenges. Despite this, if the Fed reduces rates, the market may not fully discount lower backlogs for 2025. Consensus forecasts suggest flat to negative EPS growth for the cyclical machinery sector in 2024. Feniger downgraded GFL Environmental Inc (GFL) to Neutral and Cummins Inc (CMI) to Underperform, while upgrading PACCAR Inc (PCAR) to Neutral. Terex Corp (TEX) was also downgraded to Underperform.
January 19, 2024 | 7:21 pm
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POSITIVE IMPACT
PACCAR Inc upgraded to Neutral from Underperform with an increased price target of $97, despite an expected decline in truck production.
The upgrade to Neutral and a higher price target suggest that the analyst believes PACCAR is better positioned than its peers to weather the downturn, which could lead to positive investor sentiment and an uptick in the stock price.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 90
NEGATIVE IMPACT
Cummins Inc downgraded to Underperform from Neutral with a reduced price target of $225, due to expected industry challenges and a more negative outlook compared to PACCAR.
The downgrade to Underperform and a lowered price target indicate a bearish view on Cummins' prospects, which could result in a decline in the stock price as investors adjust their expectations.
CONFIDENCE 85
IMPORTANCE 85
RELEVANCE 95
NEGATIVE IMPACT
GFL Environmental Inc downgraded to Neutral with a price target of $35, reflecting anticipated challenges in the machinery sector for 2024.
The downgrade to Neutral suggests that the analyst sees limited upside potential for GFL in the near term, which could lead to negative sentiment among investors and pressure on the stock price.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
NEGATIVE IMPACT
Terex Corp downgraded to Underperform from Neutral with a price target of $57, aligning with the negative outlook for the sector.
The downgrade to Underperform for Terex Corp reflects a pessimistic view on the company's near-term performance, which could lead to bearish investor sentiment and a potential decrease in its stock price.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 85