Shares of Navistar International Corp. ran up 9% in active midday trade Monday, after RW Baird turned bullish on the commercial and military truck and truck engine parts maker for the first time in at least 2 1/2 years. Analyst David Leiker raised his rating to outperform, after being at neutral since at least September 2014. "We believe Navistar is nearing the end of a half-decade transformation after a near-fatal decision to internally produce heavy-duty engines," Leiker wrote in a note to clients. "We believe the transformed Navistar is on the verge of driving higher volume, profit margins and earnings that could take the stock above $50 over the next several years." Leiker said the company's efforts have helped stabilize market share and have improved profitability, just as he expects truck industry volumes to bottom this year. After the Environmental Protection Agency's new emissions requirements in 2010, Navistar had pursued an "unsuccessful" engine strategy--exhaust gas recirculation--relative to the rest of the industry's selective catalytic reduction aftertreatment approach, Leiker said. Starting in 2012, Navistar abandoned its EGR approach, and changed its chairman, chief executive, chief financial officer and chief operating officer. The stock has lost 10% year to date, while the Dow Jones Transportation Average has gained 3.2% and the S&P 500 has climbed 8.8%.
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