Shares of Paccar Inc. surged 4.4% in midday trade Tuesday, after UBS turned bullish on the truck and truck parts maker for the first time in nearly two years, on the belief that truck production will pick up over the next year, that the used truck market is stabilizing and freight activity is improving. Analyst Steven Fisher raised his rating to buy after being at neutral since October 2015, and raised his stock price target to $75, which is 16% above current levels, from $66. "We think the health of the used market is often a leading indicator for new production," Fisher wrote in a note to clients, and with volumes improving, "we think pricing is also stabilizing. Fisher said not only have Class 8 heavy truck orders been "very strong" so far in 2017, he doesn't believe large on-highway fleets have started spending broadly yet, leaving room for the market to run higher. The stock has gained 1.8% year to date, while the Dow Jones Transportation Average has advanced 2.9% and the S&P 500 has climbed 8.7%.
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