Shares of Cummins Inc. CMI, -0.31% sank 1.7% in premarket trade Friday, after J.P. Morgan turned bearish on the engine maker, citing concerns that the North America truck cycle had peaked and as demand from China slows. Analyst Ann Duignan cut her rating to underweight, after being at neutral for at least the past three years. She slashed her stock price target to $137, which is 3.1% below Thursday's stock closing price, from $156. Duignan said a recent surge in Class 8 truck orders is a result of dealers ordering to stock inventory, which she expects will lead to a "steeper decline" for the industry when fundamental turn. Separately, Duignan said investing in technology will be expensive for Cummins, but necessary, as the commercial vehicle industry appears to be pivoting away from diesel as a fuel. She said the shift to alternative drivetrain technologies "is attracting a significant number of new competitors who are well capitalized and post a threat to [Cummins'] core business." The stock had tumbled 19.9% year to date through Thursday, while the S&P 500 SPX, +0.62% has gained 6.9%.
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