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The analyst mentions that 2Q earnings for the machinery group, supply chains, and increasingly demand destruction fears into FY23 continue to dominate investor conversations as backlogs remain well ahead of "normal" levels. Still, rolling macro indicators coupled with rising interest rates are clouding 2023 demand expectations across a host of equipment.
The supply chain headwinds seem increasingly company-specific (vs. last year) — a thesis likely to begin creeping into go-forward company outlooks this quarter, noted Boeschen.
The analyst believes companies with outsized aftermarket exposure, more resilient end-market dynamics into FY23, and/or company-specific margin improvement stories present the most compelling near-term set-ups.
The analyst continues to believe for PCAR that the rampant adoption of its MX engine sets the stage for a highly idiosyncratic, high margin, and less cyclical parts revenue stream, slated to accelerate early this decade as engines reach the "overhaul" stage.
Boeschen sees PCAR uniquely positioned to benefit from a robust 2022-23 Class 8 production backdrop, despite the recent reprieve in truck spot rates on stronger-than-average replacement demand into next year and beyond.
Price Action: PCAR shares closed higher by 4.64% at $84.04 on Tuesday.
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