Morgan Stanley Downgrades Daimler Truck on Peak Cycle Concerns

Morgan Stanley on Friday downgraded Daimler Truck Holding AG to “Equal-weight” from “Overweight,” signaling a tactical shift in its view on the stock. The bank cited concerns that the commercial truck market cycle is nearing its peak, making the risk-reward profile less attractive after a significant rally.

A Tactical Call on Valuation

The downgrade follows a roughly 50% rally in Daimler Truck's shares from their 2025 lows, which has pushed the company's valuation to the upper end of its historical range. Despite the rating change, Morgan Stanley raised its price target on the stock to €50 from €47, implying a potential 9% upside from current levels.

Analysts at the firm emphasized that the move is tactical rather than a change in their fundamental view of the company. "DTG remains our preferred OEM, but think the market will not consistently pay a much higher multiple at this stage of the cycle," the analysts wrote in a note, adding that the risk-reward is now "much less attractive than over the past year."

Cycle Indicators Flash Caution

Morgan Stanley's analysis points to historical patterns suggesting the cycle is maturing. Truck stocks have typically peaked nine to 11 months following the initial inflection in North American Class 8 orders, and the current cycle is now in its ninth month.

The firm also noted that a key internal metric, the "second derivative of order growth," has already rolled over. Analysts believe that even with record monthly order volumes through the end of the year, tough year-over-year comparisons make new highs in this indicator unlikely.

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Upgraded Forecasts and Peer Ratings

Underpinning the higher price target, Morgan Stanley raised its earnings-per-share (EPS) estimates for Daimler Truck, citing stronger North American volumes and margin improvements. The bank lifted its 2027 EPS forecast by 9% to €5.54 and its 2028 forecast by 16%.

Key forecast updates include:

• Trucks North America EBIT margin: Forecast to reach approximately 10% in 2026 and 12.5% in 2027.
• North American Class 8 market: Projected to grow 20% year-over-year in 2027 to 325,000 units, above the consensus expectation of 15% growth.

Morgan Stanley left its ratings on other truck manufacturers unchanged. PACCAR Inc. and Volvo both remain at “Equal-weight,” while Traton SE is maintained at “Underweight.”