Navistar Heading for Loss, Stock Up

CHICAGO December 15, 2003; Reuters reported that Navistar International Corp. on Monday forecast a larger-than-expected loss for the first quarter of 2004, but its stock climbed over 4 percent as investors focused on the truck maker's ambitious long-term growth plans.

Navistar said it expects to double in size to become a $15 billion company by the end of the next business cycle, noting the typical cycle lasts 8 to 11 years.

"That implies they have to grow the top line by 7 percent a year," said James Sanders, equity analyst at Standard and Poor's Investment Advisory Services.

Navistar reaffirmed its previously lowered 2004 profit forecast of $2.02 a share, but said it anticipated a first-quarter loss of 40 cents to 50 cents a share, versus a year-earlier quarterly loss of $1.49. It said holiday production shutdowns would weigh on first-quarter operations.

Analysts on average were expecting a quarterly loss of 35 cents a share and 2004 profit of $2.64, according to Reuters Research, a unit of Reuters Group Plc.

The maker of International brand trucks is expected to provide further details of its growth strategy at an analysts' meeting in New York this afternoon.

Navistar will benefit as the truck industry recovers along with the broader economy, Sanders said.

He said the stock is likely also getting a boost from an article in the latest edition of Barron's, in which Arnie Schneider of Schneider Capital Management named Navistar as one of his top picks. Schneider said he sees opportunity in cyclical stocks next year.

Sanders said Navistar's goal of doubling in size in roughly a decade might be overly optimistic.

"Is that realistic in the markets they've traditionally served? I don't believe it is," said the analyst, who has a "sell" rating on the stock.

Shares of Navistar rose $1.78, or 4.1 percent, to $45.56 in early trading Monday on the New York Stock Exchange