Zacks Investment Research upgraded shares of Navistar International Corp. (NAV) from UNDERPERFORM to NEUTRAL on December 04, 2012, with a target price of $21.00.
Navistar faces significant supplier risk, owing to higher dependence on few suppliers of components. Further, we are worried about its mounting research and development expenses on the back of stricter regulations by the government. In the third quarter of fiscal 2012, the company reported a loss of $1.48 per share, a sharp contrast to the profit of $0.60 in the prior-year quarter. The loss was also wider than the Zacks Consensus Estimate for a loss of $1.39. However, Navistar continued to be the leading player in the global truck market beside Daimler and PACCAR. The company also enjoys a steady stream of revenues from government contracts. Due to these reasons, we have upgraded our recommendation on the stock to Neutral from Underperform and set a target price of $21.00.
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