William Blair analysts recently weighed in on Cummins Inc. (NYSE:CMI) and Tableau Software Inc (NYSE:DATA) following Q4 earnings reports from both. While one analyst remains on the sidelines for Cummins, citing worse than expected earnings and headwinds, the other expresses positive sentiment on DATA after strong earnings due to market positioning.

Cummins Inc.

Analyst Lawrence De Maria of William Blair weighed in on Cummins after the company posted its Q4 2015 earnings on Thursday. The company posted a lower than expected earnings per share of $2.02 versus consensus estimates of $2.11 and a 20% drop in net income to $368 million, compared to $465 million from the same quarter of last year. The company also posted worse than expected 2016 guidance.

The analyst believes that although Q4 was an earnings miss, it could have been worse “given the expected declines in North American engines.” Regarding the lower than expected EPS of $2.02, the analyst believes this is $0.15 to $0.20 higher than his own expectations from the quarter, attributing this “gain” to a favorable low tax rate due to the federal research tax credit. Further reasons for the “gain” include “broader market forces such as the weaker dollar and an expected slow pace of interest rate increases, recently announced cross border merger-and-acquisition (M&A) activity, commodity stabilization, and a shorter-term rally of the heavily sold names (e.g., miners).”

Although the stock price rose 9% to about $97 following earnings, the analyst states no “compelling reason for the rise to be sustained.” Despite the company’s recent cost cutting efforts, De Maria warns about headwinds ahead. These headwinds in include “Cummins’ large emerging-market exposure (roughly 35%), the NAFTA truck cycle, which is weakening precipitously, vertical integration (likely gradual), and the slowing cadence of changing emissions standards.” He continue by stating the company’s success in Asian markets, specifically China, despite an overall weak market.

While De Maria is positive on the company’s “strong balance sheet” and “relatively high dividing yield,” the analyst still believes “the bigger issue is further weakness in the second half and the implication for 2017, which would be another down year.”

On February 4, the analyst reiterated a Market Perform rating on the company with a $95 price target. According to TipRanks’ statistics, out of the 6 analysts who have rated the company in the last 3 months, 1 gave a Buy rating, 2 gave a Sell rating, and 3 remain on the sidelines. The average 12-month price target for the stock is $96.20, marking a 3% downside from current levels.


Tableau Software Inc

Analyst Bhavan Suri of William Blair weighed in on Tableau Software following the company’s fourth quarter earnings. In this report, the company posted above consensus revenue and EPS, while also reporting 36.4% billings growth.

Although earnings were positive, the analyst believes “sales registered [were] well short of investor expectations,” resulting in a 35% stock drop following the report. He believes investors were expecting an upside of over $20 million in the earnings, “consistent with the company’s past two fourth-quarter performances.” Management commented that this “lack of upside” resulted from “softness” in U.S. and Canada spending, which led to regional growth rate declines. Despite decreased sales, management “expressed confidence that the softness was not due to competitive issues and that win rates remain unchanged.”

On February 4, 2016, Suri reiterated his Outperform rating on the company without a price target. The analyst remains bullish on the company citing strong demand for its software and its positioning in the market. While he cites disappointing, lower-than-expected guidance, the analyst believes that owning the stock is the “right move” due to increasing competition and the company’s competitive advantage from “product differentiation.”

According to TipRanks’ statistics, out of the 14 analysts who have rated the company in the past 3 months, 6 gave a Buy rating, 1 gave a Sell rating, while 7 remain on the sidelines. The average 12-month price target for the stock is $67.64, marking a 64% upside from current levels.