Video | Spring Training: Machinery and Construction

Research evidence excerpt

Video | Spring Training: Machinery and Construction

IdeaM

Stock Ideas Upside/Downside Risks

Stock Idea CMI; Overweight CNH; Overweight CRH; Overweight DE; Overweight

Risk/Reward

Risk to Upside • On-hwy vehicle orders • Stronger crop prices result • Acceleration of the • Stronger crop prices result

exceed expectations in stronger Farmer profits construction cycle leading to in stronger Farmer profits

• Prime power investment and higher equipment volume/price assumptions and higher equipment

and additional backup demand that differ from our base demand

generator capacity • Stronger than expected US case • US construction spending is

announcements construction spending • US infrastructure spend stronger than expected

• Power Systems orders and • Precision planting surprising to the upside • Precision Ag adoption

throughput penetration exceeds • M&A: prudent allocation of exceeds expectations

• Reduced earnings drag expectations capital

from Accelera • CRH splitting the US

business from the European

assets, presenting re-rating

potential

Risk to Downside • Prolonged truck recovery in • Weaker crop prices • Deceleration of the • Weaker crop prices

2026 pressure farmer cash construction cycle pressure farmer cash

• Further changes to 2027 returns • US infrastructure spend returns

emissions regulations • Construction demand surprising to the downside • Construction demand

creating uncertainty disappoints and pressures • M&A: poor capital allocation disappoints, pressuring

• OEM vertical integration margins margins

accelerates • Competitive behavior • Competitive behavior

• Off-hwy vehicle markets deteriorates pushing prices deteriorates pushing prices

disappoint lower and resulting in share lower, resulting in share loss

loss and higher margin and higher margin