Navistar shares up after analyst sees improvement

NEW YORK (AP) -- Shares of Navistar International Inc. rose Tuesday on expectations of gradual sales and profit improvements at the commercial truck and engine maker.

THE SPARK: Jefferies analyst Stephen Volkmann backed his "Buy" rating and $45 price target for Navistar stock. While the shares haven't soared, he noted that the company is meeting its product and financial goals.

THE BIG PICTURE: Lisle, Ill.-based Navistar makes military trucks, diesel engines and commercial buses. As sales slumped last year, Navistar launched a cost-cutting drive and said it would explore selling some of its businesses.

On Monday the company said that Andrew Cederoth, its executive vice president and chief financial officer, will leave the company at the end of the month as part of a planned transition to a new CFO. That follows the company's April promotion of President and Chief Operating Officer Troy Clarke to the CEO.

THE ANALYSIS: Volkmann noted that Navistar shares have lagged the overall machinery industry by more than 20 percent since the end of March.

"The weakness appears overdone in our view as the company has successfully certificated the 15-liter and 13liter engines," Volkmann wrote in a note to investors. He also said Navistar maintained liquidity above its targeted goal of $1.16 billion and is showing sequential improvement in order rates."

THE SHARES: Up $1.22, or 4.6 percent, to $27.84 in afternoon trading, after peaking at $27.95 earlier in the day. Over the past 52 weeks, the stock has traded between $18.17 and $38.81.