Analyst Note| Dawit Woldemariam |
CNH’s strong second-quarter results led us to increase our fair value estimate to $12.50 from $11.80. We raised our near-term revenue and margin assumptions to reflect stronger end market performance than we previously forecast. Looking across CNH’s end markets, we think agriculture demand will continue to be a major driver in the back half of the year. In our view, demand will be supported by strong crop exports to China. This dynamic has been a key reason why crop prices have been relatively high over the past year. Rising crop prices have propelled farmer incomes higher, allowing them to refresh their aging agriculture equipment--a benefit to CNH.