Morgan Stanley Bullish on Machinery Industry

Investing.com — Morgan Stanley is optimistic about the machinery industry, raising its sector rating to “attractive” for 2025, attributed to improved clarity on key equipment cycles.

The brokerage has upgraded CNH Industrial NV (NYSE:CNH) and Timken Company (NYSE:TKR) to “overweight,” favoring these “value” plays for their de-risked profiles. It raised the target price for CNH from $11 to $16.5 and increased Timken’s target price by $11 to $93.

Morgan Stanley mentioned three key themes driving 2025 performance: equipment cycle positioning, valuations, and the potential impacts of a Trump presidency. The firm prefers North American commercial vehicles and agricultural equipment, while noting that construction equipment faces significant challenges.

The firm maintains an “overweight” rating on Cummins (NYSE:CMI), Paccar (NASDAQ:PCAR), Wabtec, Deere (NYSE:DE), and Martin Marietta, while being “underweight” on Caterpillar (NYSE:CAT), Terex (NYSE:TEX), Lincoln Electric, and Donaldson.

Additionally, the note flagged macroeconomic and geopolitical risks associated with a Trump presidency, including trade uncertainty, inflation, and a strong U.S. dollar. However, Morgan Stanley identifies rental equipment firms like United Rentals (NYSE:URI) and WSC, as well as aggregates companies Martin Marietta and Vulcan, as well-positioned due to their U.S.-focused sales and pricing power.