Global Truck Markets Have Peaked, BofAML Says in Downgrade Note

(Bloomberg) -- Global truck markets are likely to decline for the next two years while North America Class 8 order cancellations may start to pick up, BofAML said.

"Fears of slowing growth have already hit markets, but we haven’t even seen a weaker Class 8 truck order number yet," analyst Ross Gilardi wrote in a note. "Our global truck model predicts a 6% decline in 2019, accelerating to a 10% decline in 2020."

Gilardi says some truck stocks are already baking in the peak, like neutral-rated Paccar Inc., Cummins Inc., and Allison Transmission Holdings, though he sees additional earnings risk for Wabco Holdings and CNH Industrial given their European exposure.

Global Truck Markets Have Peaked, BofAML Says in Downgrade Note

Wabco’s rating is double-downgraded to an underperform, the only equivalent sell out of 20 analysts who cover the stock, according to Bloomberg data. The price target moves to $95 from $130, which implies 14 percent downside to Tuesday’s close. CNH Industrial gets downgraded to a neutral.

Wabco, which is indicated lower by several points after already having fallen more than 23 percent year-to-date, reports third-quarter results Thursday before the market open.

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