Key Points
- Morgan Stanley sees early signs of a recovery in the global truck market.
- They expect a cyclical recovery to begin in 2027.
- Daimler Truck is the firm’s top pick in the sector.
- PACCAR and Volvo are rated “Equal-weight.” Traton was downgraded to “Underweight.”
The global truck market is still struggling, but analysts at Morgan Stanley see some early signs of a recovery on the horizon. While they expect sales to continue to decline in North America through 2026, they believe the industry is approaching a bottom and that a cyclical recovery could begin in 2027.
The sector is currently facing several headwinds, including a weak global economy and regulatory uncertainty. However, the analysts at Morgan Stanley point to several factors that could provide a lift later this year, including improving freight rates and greater clarity on environmental rules.
With truck stocks typically leading new orders by 3 to 9 months, the firm recommends that investors start building “selective exposure” to the sector now.
Morgan Stanley’s top pick is Daimler Truck. The company is the market leader in North America, which positions it well for a potential rebound. It also has a strong shareholder return strategy, yielding about 8%.
The firm is more neutral on PACCAR and Volvo. They see PACCAR as a “best-in-class operator,” but they believe its stock is already fully priced. As for Volvo, they note that the European market is more stable and that the company could benefit from U.S. tariffs.
The one company they are cautious on is Traton, which they downgraded to “Underweight.” They see headwinds from the ramp-up of the company’s new factory in China and expect its international margins to be hit by U.S. tariffs.
Overall, Morgan Stanley’s message is that while the road ahead is still bumpy, it might be time to start looking for opportunities in the trucking sector.
