Cummins Buy Rating Backed by Engine Margin Expansion and Power Generation Growth

Citi analyst Kyle Menges has maintained their bullish stance on CMI stock, giving a Buy rating on February 5.

Kyle Menges has given his Buy rating due to a combination of factors impacting Cummins’s future performance. The decision is primarily based on the expectation of margin expansion in the company’s Engine segment, despite anticipated lower volumes in 2025. This expansion is driven by operational improvements, which could bolster earnings even in a challenging market environment. Furthermore, Cummins has projected conservative guidance, suggesting potential upside in their Power Systems and joint venture earnings, which aligns with a positive outlook for the North American heavy-duty truck market in the latter half of 2025.
Another significant factor contributing to the Buy rating is the strong growth potential in Cummins’s power generation business. The company is capitalizing on a growing data center backlog and has committed to increasing its global power generation capacity, supported by a substantial investment. Although there are challenges in the Accelera business, with slower customer demand and uncertainty in some areas, Cummins remains focused on long-term strategies, such as the battery cell manufacturing joint venture, to stay ahead in the transition to battery electric vehicles.

In another report released on February 5, Morgan Stanley also reiterated a Buy rating on the stock with a $425.00 price target.