Analyst Angel Castillo of Morgan Stanley reiterated a Buy rating on Cummins (CMI – Research Report), reducing the price target to $425.00.
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Angel Castillo has given his Buy rating due to a combination of factors that highlight Cummins’ strong performance and promising future outlook. The company reported impressive fourth-quarter results, significantly surpassing expectations with an adjusted EPS of $5.16 compared to the anticipated $4.65. Additionally, Cummins provided a 2025 outlook that was better than expected, indicating a positive EBITDA range that exceeded consensus estimates by approximately 4% at the midpoint.
Despite some concerns around the Engine segment’s guidance, Angel Castillo views Cummins’ 2025 outlook as conservative. This is particularly evident in their Class 8 outlook, which is more cautious than others in the industry, suggesting a 5% year-over-year decline in HD Truck Group 2 engine production. Nevertheless, engine margins are projected to grow due to cost-control measures and aftermarket contributions, while the Power Generation segment anticipates 5-15% growth. These elements, coupled with favorable pricing conditions, support the Buy rating and reflect a potential for margin expansion and growth in the coming year.
Based on the recent corporate insider activity of 121 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of CMI in relation to earlier this year.