Goldman Sachs Raises Truck Capex Forecasts (CMI, DAN, ETN, ARM)

Goldman Sachs said that it has raised ots North America truck production forecasts by an average of 17% in 2011-12 to 242,000/ 295,000 units due to tightening truck capacity utilization and pricing power, as well as improved macro visibility and favorable accelerated depreciation provisions afforded by proposed tax legislation. “Our estimates now assume demand approaches mid-cycle levels in 2011, consistent with a recovery in trucker returns,” Goldman Sachs writes. “We expect production to rise 27% above replacement demand in 2012 as the industry increases fleet capacity to accommodate rising freight volumes, consistent with the GS Global ECS forecasts for US and Canada GDP growth that accelerate to +3.6% and +3.3%, respectively.” The companies mentioned in the report include: Dana Holding Corporation DAN, which closed Wednesday at $16.87; Cummins Inc. CMI which closed at $108.62; ArvinMeritor ARM which closed at $19.99; and Eaton Corporation ETN which closed at $99.24.