Industrial manufacturer Oshkosh Corporation is showing significant growth potential, and investors should capitalize on it, according to Baird. Analyst Mircea (Mig) Dobre upgraded shares to outperform from neutral and raised his price target to $137 from $89. The new price target suggests a 35% upside from where the stock closed Tuesday. Dobre highlighted Oshkosh’s second-quarter results as a sign of operational improvement for the company after it dealt with supply chain issues and price-cost mismatches over the past 18 months. These issues impacted Oshkosh’s margins across its three segments: access equipment, defense and vocational. “The pressure in Vocational and Defense offset an Access business where execution/margin was ramping,” Dobre said in a Wednesday note. “We are now seeing a clear inflection in both Vocational and Defense margins.” The analyst highlighted several signs for margin improvement with Oshkosh’s defense segment, such as increasing annual revenue as well as the repurposing of excess defense capacity toward telehandlers and the production ramp on its multibillion-dollar and 10-year contract with USPS, through which Oshkosh is manufacturing a new fleet of U.S.-built postal delivery vehicles. In vocational, Dobre noted the company’s second-quarter margin improvement as an indicator of improved supply chains and further margin growth. Dobre also called Oshkosh’s acquisition of airport equipment company AeroTech for $800 million in cash a “very good fit” with its broader portfolio. Oshkosh reported adjusted earnings per share of $2.69 in its second-quarter report Tuesday, exceeding the StreetAccount estimate of $1.64 per share. The company also posted a revenue of $2.41 billion, again beating analysts’ expectations of $2.25 billion. The stock has advanced 15.2% year to date and gained nearly 1.3% on Wednesday. — CNBC’s Michael Bloom contributed reporting.
