Wolfe Research Upgrades PACCAR (PCAR) to Peerperform

Wolfe Research analyst Scott Group upgraded PACCAR (NASDAQ: PCAR) from Underperform to Peerperform.

The analyst comments: "Based on our revised estimates, PCAR is trading at 20x our trough C25 EPS estimate, 20x our slightly recovering C26 EPS estimate, and 15x our more normalized $6.80 EPS estimate. This compares to PCAR's 5- and 10- year average forward P/E multiples of roughly 13x and 14x.
Thus, PCAR is trading largely in line with historical multiples on our more mid-cycle C27 EPS estimate. And as shown below, we now expect that PCAR's gross margins will bottom this year. Further, PCAR's relative stock performance seems clearly correlated with its gross margin trajectory. So, with gross margins likely to bottom in 4Q, it seems hard to see much more absolute downside for the stock from here. That said, we don't see a lot of upside for the stock either as our C26 EPS estimate remains well below Consensus. So, we suspect PCAR could lag our Trucking coverage if we're starting to see a tightening TL market, but we now think that PCAR is relatively better positioned vs. other Truck OEMs given Section 232 tariffs and respective rebates. Thus, we are raising our rating on PCAR from Underperform to Peer Perform today."

For an analyst ratings summary and ratings history on PACCAR click here. For more ratings news on PACCAR click here.

Shares of PACCAR closed at $99.85 yesterday.

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