Navistar (NYSE:NAV), Cummins (NYSE:CMI), PACCAR (Nasdaq:PCAR) Bullish on Class 8 Outlook

Citing stronger fundamentals based on Class 8 orders, Barclays (NYSE:BCS) likes Navistar (NYSE:NAV), Cummins (NYSE:CMI) and PACCAR (Nasdaq:PCAR) in the sector.

Barclays said, "We believe we are at the beginning of a solid recovery in the NAFTA truck market, which should continue for the next few years. The fleet has aged past prior peak levels, used truck availability is low, and we see an improving freight environment. We are increasing NAFTA retail sales for Class 8 to 230K from 210K for 2011 to reflect improving fundamentals and constructive dealer channel checks.

"November's Net Order Data supports our view that Class 8 momentum is building: ACT released its Preliminary Net Order figures for November last week, with Class 8 orders at 26.3K, an increase of 39% sequentially and 149% y/y....

"We adjust our models for Cummins, Navistar, and PACCAR to reflect our more bullish Class 8 outlook. Positive trends in Class 8 should have a significant impact on overall revenues and profitability for our trucking names in 2011. We are adjusting our numbers as a result of these improving truck fundamentals and indicators, including ATA Tonnage. The revision to our CMI model also reflects broader margins following constructive meetings with management on Wednesday. We reiterate our OW rating on CMI and our 2-EW ratings on NAV (raises PT from $47 to $50) and PCAR (PT increased from $51 to $54)."

Navistar closed Friday at $58.03, down $0.07, or 0.12 percent. Cummins closed at $105.03, up $0.78, or 0.75 percent. PACCAR ended the session at $56.71, up $0.47, or 0.84 percent.