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Jefferies Slashes Target, Estimates for Cummins after Revenue Warning; Somehow, Still a “Buy” (CMI)

By Dividend.com,  July 11, 2012, 08:45:03 AM EDT

Diesel engines maker Cummins Inc. ( CMI ) on Wednesday caught some mixed commentary from analysts at Jefferies & Co.

The firm maintained its "Buy" rating on CMI but slashed its price target from $130 all the way down to $100. That new target suggests a much smaller 15% upside to the stock's Tuesday closing price of $86.91.

A Cummins analyst commented, "CMI announced it now expects full year 2012 revenue to be flat y/y, down from previous guidance of 10% sales growth in 1Q. 2Q12 revenue is expected to be ~$4.45 billion, well below consensus of ~$5.1 bln. Our 2012 EPS goes to $9.00 from $10.65, 2013E goes to $10.50 (from $12.60) as topline growth resumes a high single digit rate, and 2014E goes to $12.25 (from $14.35)."

Cummins shares were mostly flat in premarket trading Wednesday.

The Bottom Line
Shares of Cummins Inc. ( CMI ) have a 2.30% dividend yield, based on last night's closing stock price of $86.91. The stock has technical support in the $80 price area. If the shares can firm up, we see overhead resistance around the $95-$96 price levels.

Cummins Inc. ( CMI ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Stocks

Referenced Stocks: CMI



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