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Navistar Analyst Says Strong Traction May Be Outweighed By Industry Challenges

Priya Nigam

Backed by portfolio improvements, Navistar International Corp (NYSE: NAV) has gained significant market share, generated attractive margins and improved its balance sheet, according to RBC Capital Markets. 

While these company-specific developments are positive, they will not make Navistar immune to the expected decline in North American industry demand in 2020, in the sell-side firm's view. 

The Analyst

RBC Capital Markets’ Seth Weber maintained a Sector Perform rating on Navistar and raised the price target from $32 to $34.

The Thesis

The leading truck manufacturer reported first-quarter adjusted EBITDA of $173 million Friday, significantly ahead of the consensus estimate of $135 million. Revenue came in at $2.43 billion, representing 28-percent year-on-year growth and beating the Street’s $2.18-billion projection.

Navistar raised its FY19 revenue guidance from $10.5-$11 billion to $10.75-$11.25 billion. The company expects to grow its market share to 19 percent, and the order book suggests that 2019 is largely sold out, Weber said in a Sunday note. 

RBC raised the EBITDA estimates for FY19 and FY20 from $865 million to $895 million and from $795 million to $805 million, respectively.

View more earnings on NAV

"The looming cycle downturn” could weigh on sentiment, the analyst said. 

Price Action

Navistar shares were up 1.86 percent at $34.47 shortly before the close Monday. 

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Photo by Dismas/Wikimedia. 

Latest Ratings for NAV

Date Firm Action From To
Jan 2019 OTR Global Downgrades Positive Mixed
Dec 2018 Baird Maintains Outperform Outperform
Dec 2018 Wells Fargo Maintains Market Perform Market Perform

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