Cummins upgraded to Buy from Neutral at UBS

UBS upgraded Cummins to Buy from Neutral with a price target of $321, up from $254. While investor sentiment on the truck cycle is implicitly positive, the stocks are not adequately pricing in the next peak, the analyst tells investors in a research note. For 2026, the firm is 10%-15% ahead of consensus earnings estimates for Cummins. It expects class 8 truck demand to bottom in the second half of 2024 and peak again in 2026, reaching 350,000 units, 5% above the peak volumes seen in 2023. UBS thinks the combination of growth and company specific items will drive margins ahead of consensus and drive record earnings in 2026. It says the consensus us not giving Cummins enough credit for its growth and some specific tailwinds.