Shares of Cummins Inc. advanced more than 4% in Monday's trading session, reaching $601.57. The move followed an analyst upgrade from Raymond James, which increased its price target on the stock to $675 from $585 while maintaining an Outperform rating.
Dual Market Drivers
The firm highlighted two key factors: strengthening demand for backup power systems from global data center expansion and expectations for a rebound in North American on-highway truck markets. Cummins recently reported it is taking orders for diesel backup power units well into 2028, fueled by data center growth.
For the fourth quarter, the company posted sales of $8.54 billion. Diluted earnings were $4.27 per share, which included charges related to a strategic review of its Accelera electrolyzer business. Management has projected 2026 revenue growth between 3% and 8%, with an EBITDA margin target of 17% to 18%.
Balancing Act and Future Catalysts
While data center demand provides a tailwind, the investment thesis remains partly contingent on a recovery in core truck engine orders later this year. Furthermore, existing tariffs were noted as a potential headwind, possibly trimming annual margins by approximately 50 basis points if they remain unchanged.
Raymond James also suggested share repurchases could resume in 2026 as balance sheet pressures ease. The next major event for investors is Cummins' Analyst Day scheduled for May 21 in New York. The market will be looking for detailed commentary on power systems capacity, capital spending plans for Accelera, and the company's framework for returning capital to shareholders.
