Cummins falls 29% from its high as three banks cut targets; November 5 earnings test the diesel case
Citi, Bernstein and Barclays cut their Cummins targets between October 12 and 16 while UBS says diesel standby stays standard through 2028-29. Q3 results on November 5 decide whether the AI power premium survives.
Vincent Jiang · 3 min read
Three banks cut their Cummins price targets in five sessions and the stock kept falling. Citi+0.73% — Citi, up 0.73 percent today moved from USD 790 to USD 630 on October 12, Bernstein from USD 700 to USD 557 on October 14, Barclays+0.69% — Barclays, up 0.69 percent today from USD 760 to USD 675 on October 16, all keeping buy-side ratings 123. The stock stood at USD 522.62 on the NYSE at 9:56 a.m 3. ET on October 20, about 29% below its USD 737.76 52-week high, on a USD 72.4 billion market cap 3.
Three banks cut Cummins targets 16% to 20% in five sessions
- Old target
- New target
Data
| Old target | New target | Change | |
|---|---|---|---|
| Citi (Oct 12) | 790 target $ | 630 target $ | -20.3% |
| Bernstein (Oct 14) | 700 target $ | 557 target $ | -20.4% |
| Barclays (Oct 16) | 760 target $ | 675 target $ | -11.2% |
UBS says the 2027 build still needs diesel
The bull case and the bear case come from the same note. UBS analyst Steven Fisher wrote on October 16, as carried by GMT Eight on October 20, that data center construction accelerates again in 2027 and that most projects through 2028-29 stay grid-connected with traditional diesel backup 4.
Diesel backup is the standby generation Cummins sells, and UBS named it a beneficiary alongside Caterpillar and Quanta Services+1.09% — Quanta Services, up 1.09 percent today; Cummins makes engines, generators and power systems 24. UBS sized the market in the same note, as carried: data centers directly account for about USD 63 billion, roughly 5% of the USD 1.3 trillion US non-residential construction market, and 20% to 30% counting indirect power and factory spending 4.
Revenue is growing faster than profit
The complication sits in the quarter. Q2 revenue of USD 9.46 billion beat the USD 9.33 billion estimate, up 9.4% year over year, yet EPS of USD 6.73 missed the USD 7.21 consensus 13. Filed figures show the gap: revenue rose to USD 9.46 billion in Q2 2026 while operating income grew only 2.1% to USD 1.22 billion 7.
Q2 2026 revenue jumped 9.4% but operating income grew only 2.1%
- Revenue ($B)
- Operating income ($B)
Data
| Revenue ($B) | Operating income ($B) | |
|---|---|---|
| Q1 '24 | 8.4B | 0.8B |
| Q2 '24 | 8.8B | 0.94B |
| Q3 '24 | 8.46B | 0.95B |
| Q4 '24 | 8.45B | 0.66B |
| Q1 '25 | 8.17B | 1.06B |
| Q2 '25 | 8.64B | 1.19B |
| Q3 '25 | 8.32B | 0.75B |
| Q4 '25 | 8.54B | 0.7B |
| Q1 '26 | 8.4B | 0.86B |
| Q2 '26 | 9.46B | 1.22B |
UBS put the warning next door, as carried: Caterpillar's power segment ran 39% incremental margins in Q2 and consensus expects them to fade 4. And after the CoreWeave bond selloff, the bank said industrial suppliers disclose too little to size their exposure to newer cloud buyers 4.
The parts business just changed hands
On October 19, Cummins handed the aftermarket supply of its HyStat electrolyser fleet, more than 400 installed systems and 1,000-plus stacks in 65 countries, to Stargate Hydrogen, an Estonian electrolyser maker backed by Repsol that it acquired via Hydrogenics in 2019 5. Cummins keeps the installed machines; the Estonian company now collects on replacement stacks and service.
Zacks counts CMI down about 29% from summer highs at 15.5x forward earnings, in line with its 15-year median, with revenue projected to reach USD 41.13 billion in 2027 6.
The decision is dated. Q3 results land November 5 before the US open; the USD 2.20 quarterly dividend has a November 20 record date and a December 3 payment 1. If the power business turns volume into margin, a stock 29% off its high is the cheapest way to own the 2027 build 6. If Q2's thin profit growth was the margin peak, the AI premium in the share price has further to fall 6.
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