A Robert W. Baird analyst upgraded shares of truck parts supplier Commercial Vehicle Group Inc. Tuesday, saying the stock will rebound from its all-time lows when heavy truck production steadies later this year.
Shares of the New Albany, Ohio, company are down almost 45 percent in 2008. David Leiker said its shares no longer trade at a premium to other truck suppliers, and when heavy truck orders and production improve, the company's stock and profits should both rise.
The analyst raised his rating to "Neutral" from "Underperform," and kept a price target of $10 per share. He said he is growing more confident that production of large trucks is steadying. Demand had been weakened by new emissions regulations that will take effect in 2010, he wrote.
"The Class 8 market has also shown signs of stabilizing recently, albeit at very weak levels," Leiker said. "Both orders and production have recovered from their 2007 troughs and appear in line to slightly ahead of our current production estimate of 190,000 units in 2008."
Leiker said he could raise his price target further, into the mid-teens, later in the year.
He added that shares of other truck suppliers fell about 60 percent in late 2007, and Commercial Vehicle Group shares have now matched that decline. He said shares of ArvinMeritor Inc., Accuride Corp. and Modine Manufacturing Co. are also at "interesting" prices.
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