Class 8 net new orders for February released by A.C.T. were 13,200, down 71% year-over-year (vs. down 72% year-over-year in January), but better than Bear Stearns' estimate of 10,000-23,000.
"We won't know the break-out of export orders until mid-month," Bear Stearns said in a release. "However, we note that in January, export orders accounted for 51% of total net new orders. To put that number in context, exports were only 11% of net new orders in 2006. We continue to believe export orders will subside in coming months as the channel is filled. Accordingly, we think March and April orders will be flat to down sequentially from February."
Class 5-7 net new orders for February were 11,500 (vs. Bear Stearns' 13,000-15,000 forecast), down 41% year-over-year (vs. down 37% year-over-year in January).
"Arguably, Class 5-7 orders are a 'purer' measure of economically derived demand, given that there was a smaller pre-buy in Class 5-7 (albeit we think there was a 'pre-build')," Bear Stearns said.
"Prior to last week, the group's performance has been astonishing - particularly in the face of weakening truck fundamentals and a highly-visible downturn in Class 8 demand. We continue to believe the commercial vehicle downturn will be deeper and longer than the market expects. Putting aside the equity convolutions last week, it generally feels like sentiment will afford the truck equipment stocks a near-term 'pass.' As long as the market continues to believe Class 8 will rebound in the second half of '07, weak orders near term may have only a modestly negative impact on the group. (For instance, the group has shrugged off January's weak orders and 4Q misses.) The bigger surprise arguably might be when monthly orders are still below 20,000 this fall."