CNI Industrial's Proactive Inventory Management And Solid Operating Results Promise Greater Value: Analyst

Oppenheimer analyst Kristen Owen reiterated an Outperform rating on the shares of CNI Industrial NV CNHI and lowered the price target from $19 to $18.

CNI reported second-quarter revenue of $6.57 billion, beating the consensus estimate of $6.44 billion. Adjusted EPS of $0.52 beat the estimate of $0.48.

CNHI reaffirmed FY23 guidance, including IA net sales growth of 8-11% ($23.3 billion-23.9 billion implied) versus consensus' $23.66 billion estimate, said the analyst.

The analyst said CNHI's 2Q report offered something for everyone, with solid operating results offsetting timing shifts (sprayers) and proactive inventory management in South America. 

The analyst also noted that sentiment has not fully recovered from 4Q's earnings call, driving valuation incrementally lower versus peers. 

The analyst added that this quarter offered glimmers of what's possible: best HHP line-rates in 8 years, record segment margins, and $550 million of cost savings still to come.

With the completion of its on-highway spin-out, the analyst believes a more streamlined, and targeted investment strategy in the stand-alone business will enable improved value capture from key megatrends.

Price Action: CNHI shares are trading lower by 0.07% at $14.34 on the last check Monday.