Morgan Stanley Expects In-Line Quarter From Cummins


In a report published Monday, Morgan Stanley analyst Nicole DeBlase reiterated an Equal-Weight rating and $172.00 price target on Cummins (NYSE: CMI).

In the report, Morgan Stanley noted, “CMI is viewed as one of the highest quality companies within the Machinery universe (we agree), given its strong management team and secular growth drivers (more stringent emissions standards). Although we do believe that in 2014, CMI will return to its usual pattern of earnings beats and raises, consensus already sits near the high-end of implied $8.39-9.11 2014e guidance range, and bakes in a 15-20% EPS CAGR over 2013-15e. The stock trades in-line with Machinery peers today based on NTM P/E, below the normal 1% premium. We believe that if the company is able to execute on its 2014e guidance (where we view beats/raises as likely), it should be able to maintain its normal modest valuation premium.”

Cummins closed on Friday at $152.74.

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