Morgan Stanley on Friday reduced its recommended rating on Daimler Truck Holding AG to "equal-weight" from "overweight," citing the timing of the current truck cycle rather than any deterioration in company-specific fundamentals. The downgrade follows roughly a 50% rally in the shares from 2025 lows that has stretched the stock's valuation toward the upper end of its historical range.
Price target and earnings revisions
The brokerage lifted its price target to €50 from €47, implying about 9% upside. That target is the result of a higher 2027 earnings-per-share forecast of €5.54, a 9% increase versus prior expectations. Applying a 9x multiple to that updated EPS produces the revised target.
Why the downgrade is tactical
Analysts at the firm framed the decision as tactical. They noted a historical pattern in which truck stocks tend to peak nine to 11 months after the initial North American Class 8 order inflection; by their count, the present cycle stands at month nine. The second derivative of order growth - which the broker regards as its tightest and most reliable order-based signal - has already begun to roll over. Given that dynamic, and challenging year-over-year comparisons, the analysts argue that fresh highs are unlikely even if monthly order volumes were to reach roughly 50,000 units through year-end.
While the team continues to prefer Daimler Truck within original equipment manufacturers, they said the market is unlikely to sustain a materially higher multiple at this point in the cycle. As a result, the risk-reward profile for the shares is now viewed as "much less attractive than over the past year."
Upgrades to 2027 and 2028 EPS
Despite the rating change, Morgan Stanley raised its EPS estimates for both 2027 and 2028 - by 9% and 16%, respectively. The upgrades are attributed to stronger North American volumes and to anticipated margin benefits tied to the U.S. Department of Commerce's approval of Daimler Truck's additional U.S. content application, which becomes effective in November 2025.
Margin and profitability outlook
The broker now models a Trucks North America EBIT margin of about 10% in 2026, rising to 12.5% in 2027. For Mercedes-Benz Trucks, the broker highlighted an adjusted return on sales of 6.0% in the second quarter versus a consensus 6.4% - a shortfall the analysts attributed mainly to disrupted spare-parts logistics amid the ramp-up of the Halberstadt plant. They forecast Mercedes-Benz Trucks' adjusted EBIT margin at roughly 7% in 2026, increasing to 7.7% in 2027.
Other ratings in the coverage group
Morgan Stanley left most other recommendations unchanged. PACCAR Inc. remains rated "equal-weight," with a new target of $125 from $119, implying about 2% upside. Volvo is also kept at "equal-weight," with a target raised to SEK355 from SEK342, likewise implying around 2% upside. Traton SE stays rated "underweight," with its target nudged to €36 from €34, implying roughly 3% downside.
Market sizing
Across the coverage group, Morgan Stanley now forecasts the North American Class 8 market in 2027 at approximately 325,000 units - about 20% higher year-over-year and above consensus expectations of roughly 15% growth.
Note: All figures, targets and forward-looking estimates referenced above are those published by the brokerage and reflect its current assumptions and modeling.