Citi Trims Cummins Target to $360 Amid Freight Slowdown, But Keeps Bullish Outlook
Citi lowered its price target on Cummins (NYSE:CMI) from $430 to $360, maintaining a Buy rating despite near-term headwinds in the commercial vehicle market. As a result, shares fell around 2% intra-day today.
Citi cited a weaker freight environment and recent cuts to North American truck production forecasts from ACT Research as key factors behind the revised estimates. Dealers are reportedly experiencing “order paralysis” among fleet buyers, who are holding back on new purchases amid uncertainty around Trump-era tariffs and potential revisions to EPA 2027 emissions regulations.
While Citi’s updated 2025 estimates for Cummins now fall toward the lower end of the company’s own guidance, the firm believes CMI is better positioned than peers to navigate the cyclical softness. Unlike others in the space, Cummins benefits from broad geographic reach, a diversified product portfolio, and strong pricing stability.
Among Citi’s coverage of the commercial vehicle sector, Cummins stands out as the only stock with a Buy rating, supported by the company’s ability to withstand short-term pressure while maintaining long-term earnings strength.
| Symbol | Price | %chg |
|---|---|---|
| 373220.KS | 318000 | 0 |
| 009540.KS | 283500 | 0 |
| 034020.KS | 27850 | 0 |
| 7011.T | 2731.5 | 0 |
Cummins Inc. (NYSE: CMI) Surpasses EPS Estimates
Cummins Inc. (NYSE:CMI) is a global leader in the design, manufacture, and distribution of engines, filtration, and power generation products. The company operates through various segments, including Engine, Power Systems, Distribution, and Accelera. Cummins competes with other major players in the industry, such as Caterpillar and General Electric, in providing innovative solutions for power needs worldwide.
On May 5, 2025, Cummins reported earnings per share EPS of $4.95, slightly surpassing the estimated $4.91. This performance reflects the company's ability to manage costs and optimize operations despite revenue coming in at $8.17 billion, surpassing the Zacks Consensus Estimate of $8.07 billion.
This strong performance was driven by higher-than-expected revenues from the Power Systems, Distribution, and Accelera segments. Total revenues reached $8.17 billion, surpassing the Zacks Consensus Estimate of $8.07 billion, although it marked a decline from the $8.4 billion reported in the previous year.
Despite the overall positive results, the Engine segment experienced a 5% year-over-year sales decline to $2.8 billion, missing the estimate of $2.87 billion. Sales in North America and international markets decreased by 4% and 11% year-over-year, respectively, due to weaker on-highway demand in the United States and Latin America. This highlights the challenges faced by Cummins in certain market segments.
Cummins' financial metrics provide a comprehensive view of its market valuation and financial health. With a P/E ratio of approximately 15.12, the market values its earnings moderately. The company's price-to-sales ratio of about 1.24 and enterprise value to sales ratio of roughly 1.41 reflect its revenue valuation. Additionally, Cummins maintains a current ratio of approximately 1.34, indicating its ability to cover short-term liabilities with short-term assets.
UBS Lowers Cummins Price Target to $400, Cites Truck Market Uncertainty but Maintains Buy
Cummins (NYSE:CMI) saw its price target lowered to $400 from $432 by UBS analysts, who maintained a Buy rating despite growing concerns over the North American truck market recovery.
While uncertainty surrounding tariffs, economic conditions, and freight demand has led UBS to cut its 2025 and 2026 EPS estimates by 6% and 7%, respectively, the firm still sees earnings upside for Cummins, primarily driven by margin expansion and growth in the Power Generation segment—which UBS believes is not fully priced into the stock.
Recent industry order weakness in February suggests heightened uncertainty in the freight and trucking sectors, and UBS warns that ongoing policy ambiguity could further dampen demand. As a result, estimates for earnings from Cummins’ Engine and Components segments have been revised downward.
However, Cummins has several margin improvement initiatives in place, including lower R&D expenses as 2027 engine development winds down, price increases in Power Gen, further integration of Meritor, reduced investment in Accelera, and overall cost-cutting efforts. These benefits could be partially offset by higher warranty provisions for new engines and inflationary pressures from tariffs.
Despite near-term challenges in the trucking sector, UBS sees Cummins’ broader diversification and operational efficiencies positioning it well for long-term growth, justifying its continued Buy recommendation.
