Oshkosh Corp. (NYSE: OSK) shares have a potential 40% upside, according to a new report from KeyBanc, which initiated coverage with a $180 price target, citing robust and sustained demand in the U.S. firetruck market.
“The U.S. fire truck (known as fire apparatus) industry is a niche, but mission-critical segment of the specialty vehicle market, characterized by highly customized products, primarily public sector buyers, long replacement cycles, and regulated standards,” KeyBanc analyst Steve Barger said in a Tuesday report.
Barger’s Buy rating is underpinned by strong industry fundamentals, including a $4.5 billion annual market and manufacturing backlogs that have extended lead times for a new firetruck to three years, up from one year before the pandemic. This constrained supply has supported pricing, with the cost of a new pumper truck doubling to $1.2 million over the past decade. The table below summarizes KeyBanc's rating.
Oshkosh, which derives about 15% of its sales from its Pierce and Maxi-Metal firetruck brands, is the market leader. Barger’s $180 target is above the Wall Street consensus average of $163. The bullish call comes as municipalities continue to invest in fire safety, with annual U.S. fire damage costs doubling to $20 billion over the past 20 years despite a decrease in the number of fires.
The firetruck industry is a concentrated market, with Oshkosh, Terex Corp. (NYSE: TEX), and Austria's Rosenbauer controlling an estimated 80% of sales. KeyBanc's report noted that the "big will continue to get bigger" as lead times and backlogs normalize. While Barger is bullish on the market leader, he rated competitor Terex as a Hold. Firetrucks account for about 18% of Terex's sales.
Overall, Wall Street remains positive on Oshkosh, with 63% of analysts covering the stock maintaining a Buy rating, slightly above the average of 55% to 60% for stocks in the S&P 500.
The KeyBanc report highlights a durable, non-cyclical growth story for Oshkosh, anchored by public sector spending. Investors will be watching the company’s ability to manage its extended backlog and maintain pricing power as a key indicator of future performance.
This article is for informational purposes only and does not constitute investment advice.
