Paccar Rises 7.8% on Merrill `Buy’ Recommendation
Thursday, December 6th, 2007Paccar Inc., the world’s fifth- largest maker of medium- and heavy-duty trucks, rose 7.8 percent after Merrill Lynch & Co. recommended the stock on a projected increase in demand.
Paccar will benefit as trucking companies replace old vehicles, “a fact that we believe is being underappreciated by investors,” New York-based analyst Andrew Obin wrote in a note today. He boosted his rating to “buy” from “neutral.”
Paccar, based in Bellevue, Washington, gained $3.94 to $54.55 at 4 p.m. New York time in Nasdaq Stock Market composite trading, its biggest advance in six weeks. The stock had dropped to an eight-month closing low of $46.32 on Nov. 26.
North American production of the Biggest Trucks, known as Class 8, may rise 16 percent next year to at least 250,000, according to Merrill. Rising demand may push Paccar stock to $65, Obin said in his note.
Merrill’s optimistic outlook for heavy-duty trucks comes after Automotive News reported that U.S. sales of such vehicles this year through October fell 38 percent.
Obin said he expects demand for the trucks to increase because prices for the vehicles will rise after 2010 as a result of stricter emissions standards.
Some pollution controls begun in 2007 were required for just 50 percent of diesel truck engines sold. By 2010, all such engines must meet the standards, according to DieselNet, a Web site that provides information about emissions rules.
Obin is among four analysts who rate Paccar a “buy,” while seven have the shares as a “hold” and two as a “sell,” according to data compiled by Bloomberg.
Paccar almost tripled its net income to $1.5 billion last year from $526.5 million in 2003, as its sales doubled to $16.5 billion from $8.2 billion.
