In a report released today, Angel Castillo from Morgan Stanley upgraded Terex to a Hold, with a price target of $47.00.
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Angel Castillo’s rating is based on a combination of strategic and financial considerations surrounding the recent merger announcement between Terex and REV Group. The merger presents a strategic opportunity with potential synergies expected to reach approximately $75 million by 2028, which could enhance the combined company’s operational efficiency. However, the immediate market reaction was negative, with a significant sell-off in Terex’s shares, reflecting investor concerns over potential dilution and uncertainties regarding the value of the Aerials business segment.
Despite the strategic rationale, the merger introduces elevated risks, particularly related to the timing and structure of the deal. The expected dilution for Terex shareholders in the near term, as indicated by the EPS accretion analysis, suggests a low to mid double-digit teens negative impact by 2026. Consequently, Angel Castillo has adjusted the rating to Hold, reflecting a cautious stance as the stock’s performance is likely to be influenced by the progression of the merger deal and its associated risks.
In another report released yesterday, Citi also maintained a Hold rating on the stock with a $52.00 price target.