Navistar International (NAV)

by Zacks Equity Research

September 27, 2012 |

Navistar International (NAV) is one of the largest truck producers after Daimler and PACCAR. However, we are worried about its mounting research and development expenses on the back of stricter regulations by the government, where it generates a significant portion of revenues.

Furthermore, it faces significant supplier risk, owing to higher dependence on few suppliers of components. In the most recent quarter, 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. As such, we continue with our Underperform recommendation on the stock and set a target price of $24.00.

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