The Netherlands-based company, which manufactures heavy machinery and vehicles equipment, was downgraded amid weakening demand in the global agriculture sector, the firm said.
North American 100HP+ tractor sales have fallen 34% year over year, J.P. Morgan added.
"Farmer sentiment toward purchasing new equipment remains weak," the firm noted.
J.P. Morgan lowered its price target on the CNH Industrial stock to $5 from $6.50.
Shares of CNH Industrial were down 5.03% to $6.42 in early morning trading on Monday.
Separately, TheStreet Ratings team rates CNH INDUSTRIAL NV as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
We rate CNH INDUSTRIAL NV (CNHI) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The share price of CNH INDUSTRIAL NV has not done very well: it is down 14.56% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Machinery industry. The net income has significantly decreased by 171.7% when compared to the same quarter one year ago, falling from $173.00 million to -$124.00 million.
- The debt-to-equity ratio is very high at 5.87 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Machinery industry and the overall market, CNH INDUSTRIAL NV's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for CNH INDUSTRIAL NV is rather low; currently it is at 21.66%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.23% trails that of the industry average.
- You can view the full analysis from the report here: CNHI