What happened

Shares of truck maker Navistar International (NAV) jumped by as much as 20% in the first half hour of trading on Thursday -- just a day after the company reported earnings. The stock price move was likely driven by not one, but two newsworthy events.

So what

Navistar's fiscal third-quarter earnings report wasn't exactly a scintillating read, as the company suffered a 45% year-over-year top-line decline. Earnings fell from $1.56 per share in fiscal Q3 2019 to a loss of $0.37. Given the impact of the COVID-19 pandemic, however, bad results were pretty much expected and the final earnings tally wasn't as bad as analysts had been expecting when looked at on an adjusted basis. That's why Jefferies analyst Stephen Volkmann boosted his target price on the stock from $35 to $45 Thursday morning, and maintained his buy rating on it. Investors usually look positively on such upward price adjustments.  

Heavy duty tuck on a highway

Image source: Getty Images

Beyond Volkmann's target price adjustment, there came the news that Traton has reportedly increased its bid to buy the 83% of Navistar that it doesn't already own. The prior offer was $35 per share; the new one is reportedly $43 per share -- just slightly below Jefferies' new target. Traton is a subsidiary of auto giant Volkswagen (VWAGY 1.92%) that is, like Navistar, a manufacturer of trucks. The increased offer suggests that Traton is serious about its intentions  and willing to negotiate. Once again, news of this sort tends to get investors in a buying mood.   

Now what

Given the nature of the news, it isn't particularly surprising that the shares took off at the open of trading Thursday. That said, by 11:20 a.m. EDT, the stock had pulled back slightly from its highs, sitting with a gain of around 16%. That's still an impressive jump, but it shows that, perhaps, the initial excitement will eventually wane. Moreover, with Navistar stock trading in the low $40s at this point, upside potential from here isn't particularly exciting on the takeover front.