Cummins (NYSE:CMI) saw its price target lowered to $400 from $432 by UBS analysts, who maintained a Buy rating despite growing concerns over the North American truck market recovery.

While uncertainty surrounding tariffs, economic conditions, and freight demand has led UBS to cut its 2025 and 2026 EPS estimates by 6% and 7%, respectively, the firm still sees earnings upside for Cummins, primarily driven by margin expansion and growth in the Power Generation segment—which UBS believes is not fully priced into the stock.

Recent industry order weakness in February suggests heightened uncertainty in the freight and trucking sectors, and UBS warns that ongoing policy ambiguity could further dampen demand. As a result, estimates for earnings from Cummins’ Engine and Components segments have been revised downward.

However, Cummins has several margin improvement initiatives in place, including lower R&D expenses as 2027 engine development winds down, price increases in Power Gen, further integration of Meritor, reduced investment in Accelera, and overall cost-cutting efforts. These benefits could be partially offset by higher warranty provisions for new engines and inflationary pressures from tariffs.

Despite near-term challenges in the trucking sector, UBS sees Cummins’ broader diversification and operational efficiencies positioning it well for long-term growth, justifying its continued Buy recommendation.