Cummins' (CMI) power systems segment could drive greater earnings resilience and offset the slump in the North American commercial vehicle market due to uncertainty around how the Environmental Protection Agency's 2027 emissions rules impact the commercial vehicle cycle, Truist said in a Tuesday note.

The company is improving through the cycle, earnings per share despite facing challenges related to losses from Accelera and significant investments in research and development linked to EPA 2027.

In Truist's bear case, EPS could bottom around $18 in 2027 compared with the $12 trough during 2020, while in a bull case, the figure could approach $32 if Power Systems sustains double-digit growth and North America and China recover in tandem.

The company could benefit from multiple catalysts, like earnings contribution from power systems and distribution, the pace of the wind-down in losses at Accelera, R&D in the engine segment, and the timing of market share gains in medium-duty trucks, which could add $4 to EPS over time, the brokerage noted.

Truist reiterated its hold rating on the stock with a price target of $380 per share.

Price: 401.24, Change: -0.71, Percent Change: -0.18