KeyBanc Capital Markets analysts downgraded shares of Oshkosh Corp. (NYSE:OSK) and Terex (NYSE:TEX) to Sectorweight from Overweight in a note Thursday.
The analysts told investors in a note that they see the potential for decelerating B:B and backlog contraction.
"We expect this will be controversial given significant project funding visibility and elevated backlogs, which should lead to solid financial results this year and next," they acknowledged. "In fact, it is those well-known and presumably well-discounted dynamics that make us more cautious."
"We think order rates could moderate from recently elevated levels at the same time, supply chain improvements allow for revenue increases and faster backlog monetization," the analysts added.
KeyBanc, while clarifying they are not calling the end of the cycle, stated that the optics of sub-1x B:Bs, backlog contraction, and forward revenue visibility returning to historical ranges could increase fears of peak cycle conditions even if not imminent.
Given the current dynamics, the firm suspects potential signs of bad news will have an "outsized negative impact on shares relative to the potential upside good news could provide."