Paccar (PCAR) stock received an upgrade from Morgan Stanley on Wednesday. The note pointed to rising demand for heavy-duty semi-trucks in the coming year, which should give a boost to one of the leaders in 18-wheelers. PCAR stock rose Wednesday.
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Through its subsidiaries, DAF, Kenworth, Peterbilt and Leyland, Paccard produces a worldwide portfolio of light-, medium- and heavy-duty semi-trucks. Paccar also designs and manufactures diesel engines and vehicle performance technology. In addition, the company provides parts distribution and financial services.
Paccar’s competitors include Daimler Truck, Ford (F), Volvo (VLVY), Traton (TRATF) and Isuzu Motors (ISUZY).
There is also Tesla (TSLA), which rolled out its first semi-truck delivery to PepsiCo (PEP) at the beginning of December. The Tesla Semi will make up Pepsi’s newest fleet of delivery trucks as Elon Musk expands his line of EV vehicles. The Tesla Semi is a Class 8 truck making it a new competitor among the biggest of big rigs.
Class 8 trucks are those capable of hauling loads of more than 33,000 pounds.
Meanwhile, Morgan Stanley (MS) expects that Class 8 truck market will grow, and Paccar should benefit.
The North American Class 8 market is “more resilient than appreciated,” Morgan Stanley analyst Dillon Cumming wrote in a research note Wednesday. And he says PCAR stock is a “high quality way” to express that view. Paccar’s “conservative” margin estimates could see positive revisions in the near term.
Cumming also said the upside of industry research estimates for 2023 Class 8 production should “help create a higher peak EPS scenario.” The note raised its price target for PCAR stock to $136 from $91 and upgraded the rating to Overweight from Equal Weight.
Paccar estimates its Class 8 truck sales will range from 265,000 to 285,000 vehicles in North America for 2022, according to its Q3 report. And the company expects that range will increase to 260,000 to 300,000 for 2023.
The Bellevue, Wash.-based Paccar reported accelerating revenue growth the past four quarters, racing 103% year-over-year to $2.21 per share for its most recent results. Meanwhile, sales rose the last seven quarters, with gains steadily increasing the last three periods.
For its fourth quarter, analysts expect PCAR earnings to jump to $2.19 per share from $1.47 last year. Meanwhile, analysts target an 11% sales increase, to $7 billion from $6.3 billion. Truck sales are seen increasing to $5.76 billion from $4.96 billion.
Paccar Stock
PCAR stock is up more than 13% since a breakout from a cup-with-handle base near the end of October. Shares are pulled back and testing short-term support, consolidating well above their 10-week moving average. The stock’s Relative Strength line is sitting very near a two-year high.
PCAR stock rose 2% early Wednesday. Shares are up 20% over the last three months and 18% year-to-date.
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
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