On Monday, JPMorgan revised its stance on Cummins Inc . (NYSE:CMI), elevating the stock from Underweight to Neutral and raising the price target to $420 from the previous $355. This adjustment follows a reassessment of the company's potential sales growth, particularly in the Distribution and Power Systems segments.
The stock, currently trading at $379.60, has shown remarkable momentum with a 62.17% year-to-date return. According to InvestingPro data, seven analysts have recently revised their earnings estimates upward for the upcoming period.
The firm's analysis indicates an expectation of higher sales growth rates for Cummins, with projected earnings per share (EPS) of approximately $22.96 for December 25, showing a year-over-year increase of around 12%. For December 26, the EPS forecast rises to $27, approximately an 18% increase year-over-year.
Despite these optimistic projections, the firm has chosen to maintain a conservative approach due to concerns about capacity constraints. InvestingPro analysis shows the company trading at a P/E ratio of 25.23x, with additional insights available in the comprehensive Pro Research Report covering this $52.07B market cap machinery leader.
JPMorgan's revised outlook is based on a reassessment of Cummins' multi-year growth potential, particularly related to data centers—a factor that had been previously underestimated. The firm acknowledges that Cummins could notably exceed its long-term 25%+ incremental EBITDA margin target through 2030, even as it faces increasing headwinds in the Accelera side of its business since the Analyst Day earlier in the year.
The report also contrasts JPMorgan's bullish perspective on truck builds for 2026 with the less optimistic view from ACT Research. JPMorgan anticipates that Cummins will experience upward earnings revisions in the upcoming quarters.
The new price target of $420 is based on a forward price-to-earnings (PE) ratio of approximately 16 times for the first fiscal year, which is one multiple above the long-term average. JPMorgan justifies this higher PE ratio despite what it refers to as 'peak' earnings expected in 2026.
Technical indicators from InvestingPro suggest the stock is in overbought territory, while trading near its 52-week high of $382.86. Subscribers can access over a dozen additional ProTips and detailed valuation metrics for CMI.
In other recent news, Cummins Inc. has been making significant moves in the market. Evercore ISI has upgraded Cummins' stock rating from In Line to Outperform, with a substantial increase in the price target to $408 from $294. This adjustment reflects Evercore's positive outlook on the company, especially as it prepares to launch its new 2027 EPA-compliant engine. The engine is expected to be released by the end of the first quarter of 2026, and customers are anticipated to advance purchases, potentially boosting sales.
Cummins has also demonstrated strong financial performance, as evidenced by its Q3 2024 results. The company reported steady sales of $8.5 billion and an increase in EBITDA to $1.4 billion, marking a margin rise from 14.6% to 16.4%. Baird has responded to these results by increasing its stock price target for Cummins to $372.00, while maintaining a Neutral rating.
In addition to these developments, Cummins has launched full production of the X15N natural gas engine and inaugurated an electrolyzer manufacturing plant in Spain. These recent developments highlight Cummins' commitment to sustainable solutions and financial stability.
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