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Big sales forecast by CEO boosts Cummins stock

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A bold outlook from Cummins Inc. solidified Wall Street's positive outlook for the engine maker in Tuesday trading.

Cummins Chairman and CEO Tim Solso said Tuesday that 2011 would be a record year for the Columbus manufacturer. Company officials set a goal of $30 billion in sales in 2015 and said they expect Cummins to grow at an annual rate of about 14 percent to reach that target.

Cummins shares rose 6 percent Tuesday after the news, closing at $92.20 each. They continued to climb Wednesday, rising to $93.28 by midday.

Citigroup Inc. stock analyst Timothy Thein said he liked several things he heard during the Solso's presentation, including higher-than-expected long-term profit targets and cost-cutting plans.

"Getting there of course is another issue, but Cummins' most recent performance relative to its last target certainly adds credibility," Thein wrote in a Wednesday note to investors. "Plus, its already well-established position in attractive growth markets and tailwind from clearly-visible secular drivers also help to engender confidence, in our view."

In addition to backing a previous "Buy" rating, Thein stuck by his $115 price target for the company.

Ben Elias of Sterne Agee cut his price target for Cummins by $13, to $143, noting that that growth in the commercial vehicle industry is tough to predict and can sometimes be a bumpy road. But he said the company has proven in the past that it can meet its financial targets.

"We view Cummins as a very conservative and deliberate company and thus look at today's 'long-term' targets, as very tangible, and readily achievable," Elias wrote in a note backing his "Buy" rating.

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  1. to mention the rest of Molly's experience- she served as Communications Director for the Indianapolis Department of Public Works and also did communications for the state. She's incredibly qualified for this role and has a real love for Indianapolis and Indiana. Best of luck to her!

  2. Shall we not demand the same scrutiny for law schools, med schools, heaven forbid, business schools, etc.? How many law school grads are servers? How many business start ups fail and how many business grads get low paying jobs because there are so few high paying positions available? Why does our legislature continue to demean public schools and give taxpayer dollars to charters and private schools, ($171 million last year), rather than investing in our community schools? We are on a course of disaster regarding our public school attitudes unless we change our thinking in a short time.

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  4. The Indiana toll road used to have some of the cleanest bathrooms you could find on the road. After the lease they went downhill quickly. While not the grossest you'll see, they hover a bit below average. Am not sure if this is indicative of the entire deal or merely a portion of it. But the goals of anyone taking over the lease will always be at odds. The fewer repairs they make, the more money they earn since they have a virtual monopoly on travel from Cleveland to Chicago. So they only comply to satisfy the rules. It's hard to hand public works over to private enterprise. The incentives are misaligned. In true competition, you'd have multiple roads, each build by different companies motivated to make theirs more attractive. Working to attract customers is very different than working to maximize profit on people who have no choice but to choose your road. Of course, we all know two roads would be even more ridiculous.

  5. The State is in a perfect position. The consortium overpaid for leasing the toll road. Good for the State. The money they paid is being used across the State to upgrade roads and bridges and employ people at at time most of the country is scrambling to fund basic repairs. Good for the State. Indiana taxpayers are no longer subsidizing the toll roads to the tune of millions a year as we had for the last 20 years because the legislature did not have the guts to raise tolls. Good for the State. If the consortium fails, they either find another operator, acceptable to the State, to buy them out or the road gets turned back over to the State and we keep the Billions. Good for the State. Pat Bauer is no longer the Majority or Minority Leader of the House. Good for the State. Anyway you look at this, the State received billions of dollars for an assett the taxpayers were subsidizing, the State does not have to pay to maintain the road for 70 years. I am having trouble seeing the downside.

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