Preliminary June truck orders released by A.C.T. were "modestly lower than expected" for Class 8 and "inline" for Class 5-7, according to Bear Stearns.
Class 8 orders came in at 12,500 (vs. Bear Stearns' 13,000-15,000 forecast), down 43% year-over-year (vs. down 46% year-over-year to 15,819 in May).
"We won't know the break-out of export orders until mid-month," Bear Stearns said. "However, we note that in May export orders accounted for 38% of net new orders (vs. 40% year-to-date). To put those numbers in context, exports were only 11% of net new orders in 2006. Our best sense is that recent strength in export demand might be sustainable near-term due to 2008 emissions regulations in Mexico and Australia."
Class 5-7 orders were 12,700 (vs. Bear Stearns' 11,000-13,000 forecast), down 43% year-over-year (vs. down 45% year-over-year to 12,686 in May).
"We believe the market is 'pre-buying the pre-buy'," Bear Stearns said. "We think investors are disregarding weakness in the U.S. truck cycle and buying the 'emissions cycle,' and want to own these stocks early for the next pre-buy in the U.S. Additionally, upside first-quarter reports across the truck equipment space have confirmed our view that something has materially ignited international capital goods demand. And when the strength is as pervasive geographically and product-wise as we've seen out of first-quarter earnings -- somewhat analogous to the 'light switch' that flipped on domestically around the first quarter of 2004 -- it seems unlikely to cool in just a quarter or two. With U.S. truck demand likely to improve into 2008 ahead of the next EPA emissions deadline, our sense is that momentum could continue to move these stocks higher."