On Wednesday, Citi initiated coverage on shares of Oshkosh Corporation (NYSE:OSK) with a Buy rating and a price target of $130.00. The firm highlighted Oshkosh's potential for earnings momentum, driven by several factors within its business segments.
The analyst pointed out that the Vocational segment, which makes up about 30% of Oshkosh's sales, is particularly promising. This segment is bolstered by an order book for Fire & Emergency (F&E) services that extends to 2027, including double-digit percentage pricing. Additionally, there is a pent-up demand for refuse vehicles and a positive outlook due to the company's exposure to the recovery of air traffic and airport investments through its second-half 2023 acquisition of AeroTech.
Citi's positive stance on Oshkosh is also supported by the prospects of the Defense segment, which accounts for around 20% of sales. Growth expectations in this segment are based on the anticipated increase in production of Next Generation Delivery Vehicles (NGDV) for the U.S. Postal Service.
Despite the forecast of slight declines in the Access segment's sales in 2025 and 2026, the growth in the Vocational and Defense segments is expected to more than compensate for these dips. This outlook suggests a divergence from the consensus estimates, with Citi adopting a more optimistic view of the Vocational segment's performance relative to the broader market expectations.
In other recent news, Oshkosh Defense, a unit of Oshkosh Corporation, has secured a $27.3 million order from the U.S. Army Contracting Command for 57 Medium Equipment Trailers. This order will be fulfilled in collaboration with Broshuis B.V., a specialist trailer manufacturer in Europe. The trailers are designed to integrate with the Oshkosh Enhanced Heavy Equipment Transporter System and can transport combat vehicles weighing up to 60 tons.
In addition, Oshkosh Corporation has announced the appointment of Michael Pack as the new president of its Vocational segment. Pack, who has been with the company for 18 years, will continue to serve as the Chief Financial Officer until a successor is found.
Oshkosh Defense also secured a $108.9 million contract from the U.S. Army for additional Family of Medium Tactical Vehicles A2 and trailers. BofA Securities and Baird have both increased their price targets for Oshkosh's shares, with the former maintaining an Underperform rating and the latter maintaining an Outperform rating.
Finally, Oshkosh Corporation has announced a definitive agreement to acquire AUSACORP S.L., a manufacturer of construction and material handling vehicles. This acquisition is expected to expand Oshkosh's product range within its Access segment.
InvestingPro Insights
In alignment with Citi's optimistic outlook on Oshkosh Corporation, real-time data from InvestingPro supports a strong financial foundation for the company. With a market capitalization of approximately $6.92 billion and a trailing twelve-month P/E ratio of 9.66, Oshkosh is trading at an attractive earnings multiple, which could interest value investors. The company's robust revenue growth of 15.45% over the last twelve months as of Q1 2024, coupled with a solid gross profit margin of 18.29%, underscores its operational efficiency and potential for further earnings momentum.
InvestingPro Tips that may be particularly relevant for investors include Oshkosh's consistent dividend payments, having raised its dividend for 11 consecutive years, and the company's moderate level of debt, which suggests prudent financial management. Furthermore, analysts predict the company will be profitable this year, a sentiment that is backed by a profit over the last twelve months. For those interested in deeper analysis, InvestingPro offers additional tips on Oshkosh Corporation, which can be accessed at https://www.investing.com/pro/OSK. Investors can also take advantage of a special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking even more insights to inform their investment decisions.
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