Industrials

CFRA Trims Rating On Shares Of Caterpillar Inc. To Hold From Buy

/ / Industrials /

CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows: CAT shares have risen 65% from the end of October 2023 to a record of ~$375 per share. We now view CAT shares as fully valued following the recent run-up, and see there being less room to run given our outlook for low single-digit EPS expansion in 2024 and 2025. We believe the strong share performance can be tied to anticipated tailwinds in 2024, including government-led infrastructure investments, recovering residential construction activity, AI-driven data center buildout, and positive impacts from expected interest rate cuts. However, we view the near-term opportunity from these growth catalysts currently being baked into share price. China (typically 5%-10% of enterprise sales) poses a near-term headwind for CAT as economic conditions remain unfavorable, although a stronger-than-anticipated recovery would likely support stronger than forecasted […]

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Boeing 737 Max Output Falls in March Amid Quality Checks

/ / Industrials /

Boeing (BA) 737 Max output dropped to as low as single digits in late March as quality checks by US regulators slowed down the assembly line, Reuters reported Wednesday, citing industry sources. The jet maker set a production cap of 38 units a month following regulatory scrutiny after a blowout on a 737 Max jet in January, but the production rate has been well below this level in recent weeks, the report said.

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3M’s Solventum Spinoff Results in Modest Model Updates, RBC Capital Markets Says

/ / Industrials /

3M’s (MMM) successful spinoff of healthcare business Solventum resulted in modest updates to its model, RBC Capital Markets said in a note Monday. The company raised its Q1 earnings per share guidance last month to $2.05-$2.20 from $2.00-$2.15. The increase in the company’s EPS estimate is due to the interest income on the $7.7 billion financing ahead of the Solventum spinoff, according to the note. The firm said it is also adding back $150 million to $175 million of annual stranded costs into the updated model along with income and costs associated with Solventum transition service agreements. RBC expects that 3M will hold onto and generate interest on the dividend Solventum paid to the company. The firms said a sum of part valuation of 3M including the unaddressed per- and polyfluoroalkyl substances liability shows a 15% downside to the company’s shares. RBC reduced the price target on 3M’s stock to

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FedEx To Take Revenue Hit From USPS Contract Loss; Margins May Improve

/ / Industrials /

FedEx’s loss of its contract with the U.S. Postal Service will likely be a roughly $1.5 billion hit to revenue, BMO Capital Markets analysts say in a research note. However, the loss of the contract will likely lead to improved margins once costs associated with the USPS deal are phased out, the analysts say. FedEx “will be able to redesign its air network schedule in a manner that removes significant cost pressures over time.” FedEx shares fall 3.1%.

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CFRA Keeps Hold Opinion On Shares Of 3m Company

/ / Industrials /

CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows: MMM shares are settling lower today following the spin-off of Solventum (SOLV), MMM’s healthcare business. Holders of MMM stock received one share of SOLV for every four shares of MMM held at the close of March 18, 2024. MMM retains 20% ownership of SOLV, which will be monetized over the next five years. Shares are also reacting to today’s news of MMM receiving final court approval of its PFAS settlement with public water suppliers (PWS), totaling $10.3B, payable over 13 years. Payments under the agreement are scheduled to begin in Q3 of 2024. We believe MMM will be better positioned for recovery with a new CEO, a more focused operating model, and reduced litigation overhang. However, we view risks as still being elevated in the near term.

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United Parcel Service’s (UPS) 2026 Revenue Outlook Above BofA Securities’ Forecast

/ / Industrials /

United Parcel Service’s (UPS) 2026 revenue outlook of $108 billion to $114 billion and operating margin above 13% is higher than BofA Securities’ forecast of $105 billion and 12%, the firm said in a note Wednesday. The investment firm said it anticipates its outlook to be subject to risk given that United Parcel missed its multi-year targets at its most recent analyst meetings. The company expects mid-single-digit revenue growth and revenue per package growth of 2.5%, BofA Securities added. “This appears to be an aggressive return-to-growth outlook, despite sustained weakness in the small package market,” BofA said. BofA maintained its neutral rating on the company’s stock and cut the price objective to $158 from $164.

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United Parcel Service’s (UPS) Cost Cuts Seen as ‘Significant,’ UBS Says

/ / Industrials /

United Parcel Service (UPS) outlined “significant” cost cuts that are expected to support a “multiyear margin improvement story,” UBS Securities said Wednesday in a report. The company provided a framework for productivity drivers and network rationalization at its Tuesday analyst meeting that are expected to result in $3 billion of cost savings through 2028, UBS said. “We believe the pullback in UPS stock provides an attractive opportunity,” the report said. UBS maintained its buy rating on the stock with a $175 price target.

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