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Analyst cuts Cummins rating, citing rise in shares

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Jefferies & Co., citing the rapid ascent in price for a share of Cummins Inc., downgraded the Indiana-based engine maker's stock Friday.

Analyst Stephen Volkmann lowered his rating on the engine maker's stock to "Hold" from "Buy," noting that the shares have risen 30 percent from their October lows and are now just 10 percent below all-time highs.

Given the continued weakness in many of the markets Cummins serves, it's possible that the company's initial guidance for 2013 could come in below current average Wall Street predictions, Volkmann said.

In October, Cummins saw its third-quarter profits tumble 22 percent because of a lack of demand for commercial engines. The company it was reducing its work force by between 1,000 and 1,500 people.

Like other manufacturers, Cummins is getting hit overseas, namely in Europe, because of a widening recession and unemployment rates of around 25 percent. Companies like Ford Motor Co. closed major facilities in Europe last year and on Friday, Honda said it would cut about one in four jobs at its UK factory as it struggles with low demand.

But the U.S. is experiencing a steady recovery.

"We do see potential upside in 2013 if growth reaccelerates later in the year, particularly in North America truck and emerging markets," Volkmann wrote. He cut his 2013 profit prediction for Cummins by 50 cents to $8.75. Analysts, on average, expect a profit of $9 per share, according to FactSet.

However, Cummins apparently sees its shares as undervalued. The company, based in Columbus, approved the purchase of up to $1 billion in its own stock last month.

Shares fell 1.6 percent, or $1.83, to close at $110.61 each Friday. Over the past 52 weeks, the company's shares have traded between $82.20 and $129.51.

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  1. Now if he'd just stay there...

  2. Daniel - what about the many US citizens who do NOT follow what the Bible teaches? The Hindus, Jews, Muslims and others who are all American citizens entitled to all rights as Americans?? This issue has NOTHING to do with "What the Bible says..." Keep all Churches separate from State! Pence's ongoing idiocy continues to make Indiana look like a backwards, homophobic state in the eyes of our nation. Can't we move on to bigger issues - like educating our kids?

  3. 1. IBJ should link to the referenced report. We are in the age of electronic media...not sharing information is lazy. Here is a link http://www.in.gov/gov/files/Blue_Ribbon_Panel_Report_July_9_2014.pdf 2. The article should provide more clarity about the make-up of this panel. The commenters are making this item out to be partisan, it does not appear the panel is partisan. Here is a list of the panel which appears to be balanced with different SME to add different perspectives http://www.in.gov/activecalendar/EventList.aspx?view=EventDetails&eventidn=138116?formation_id=189603 3. It suggests a by-pass, I do not see where this report suggests another "loop". 4. Henry, based on your kneejerk reaction, we would be better off if you moved to another state unless your post was meant as sarcasm in which case I say Well Done. 5. The article and report actually indicates need to improve rail and port infrastructure in direct contradiction to Shayla commentary. Specifically, recommendation is to consider passenger rail projects... 6. People have a voice with their elected officials. These are suggestions and do not represent "crony capitalism", etc. The report needs to be analyzed and the legislature can decide on priorities and spending. Don't like it, then vote in a new legislature but quit artificially creating issues where there are none! People need to sift through the politics and provide constructive criticism to the process rather than making uninformed comments in a public forum based on misinformation. IBJ should work harder to correct the record in these forums when blatant errors or misrepresentations are made.

  4. Joe ... Marriage is defined in the Bible ... it is mentioned in the Bible often. Marriage is not mentioned once in the US or Indiana Constitution ...

  5. Daniel - Educate me please: what does the Bible have to do with laws? If the government wasn't in the business of marriage to begin with, then it wouldn't have to "define" marriage at all. Marriage could be left as a personal, religious, or otherwise unregulated action, with no ties to taxes, legal status, etc. Then people could marry whomever they want, and all this silliness would go away. Remember to vote Libertarian in November.

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