Morgan Stanley downgrades Daimler Truck as truck cycle nears peak

Morgan Stanley has reduced its rating on Daimler Truck Holding AG to "equal-weight" from "overweight" due to the truck cycle nearing its peak. The brokerage firm has taken profits on the stock's roughly 50% rally from 2025 lows, which has driven the valuation to the upper end of its historical range. Morgan Stanley has raised its price target to €50 from €47, reflecting a potential 9% upside.

The downgrade is tactical rather than fundamental. Analysts cited the historical pattern where truck stocks typically peak nine to 11 months after the initial North American Class 8 order inflection, and the current cycle has reached month nine. The second derivative of order growth, which is considered the most reliable order-based signal, has already turned down.

Furthermore, tough comparisons and record monthly order volumes of around 50,000 units through the year-end make it unlikely for fresh highs to be achieved, even with record monthly order volumes. Morgan Stanley remains its preferred OEM, but believes the market will not consistently pay a higher valuation multiple at this stage of the cycle.

The 2027 and 2028 EPS upgrades of 9% and 16%, respectively, are driven by stronger North American volumes and improved margins following the U.S. Department of Commerce approval of Daimler Truck's additional U.S. content application, effective November 2025. Morgan Stanley now projects a Trucks North America EBIT margin of around 10% for 2026, which is expected to rise to 12.5% in 2027.

However, Mercedes-Benz Trucks delivered a second-quarter adjusted return on sales of 6.0% against the consensus of 6.4%, a shortfall mainly attributed to disrupted spare-parts logistics from the Halberstadt plant ramp-up. The analysts forecast an adjusted EBIT margin of approximately 7% in 2026, which is expected to increase to 7.7% in 2027.

Other ratings remained unchanged, with PACCAR Inc. staying "equal-weight" with a target of $125 from $119, implying a 2% upside, and Volvo remaining "equal-weight" with a target of SEK355 versus SEK342, also implying a 2% upside. Traton SE stayed "underweight" with its target raised to €36 from €34, implying a 3% downside. Across the group, Morgan Stanley forecasts a 2027 North American Class 8 market of approximately 325,000 units, representing a 20% year-over-year increase and surpassing the consensus expectation of about 15% growth.