Analyst Note
| Dawit Woldemariam |Paccar posted solid second-quarter results, with reported sales reaching $5.3 billion (excluding financial services), showing the continued strength in freight demand. Paccar’s parts business was the stand-out, benefiting from strong truck utilization. This led management to raise its 2021 guidance for part sales. The expected range now stands between 20% to 22% for the year, up from 15% to 18% from the first quarter’s guidance. We raised our near-term revenue expectations to account for greater parts sales growth. However, this tailwind was partially offset by the impact of Morningstar’s probability-adjusted U.S. corporate tax rate assumption of 26% starting in 2022. Taking these factors into consideration, our fair value estimate increased slightly to $98 (up from $97).