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Pro Analysis

Sell-off of transportation and defense services firm Cubic 'overdone,' JPMorgan upgrades to overweight

A logo sign outside of a facility occupied by the Cubic Corporation in Alexandria, Virginia.
Sipa | AP Images
A logo sign outside of a facility occupied by the Cubic Corporation in Alexandria, Virginia.

JPMorgan research upgraded shares of Cubic, a transportation and defense services company, to overweight from neutral, saying a recent sell-off in the stock went too far.

Cubic designs the technology subway riders around the world use to pay their fares and it also creates training technology for militaries and other defense agencies. The company reported a third-quarter loss of $22 million last week, sending its shares tumbling more than 10 percent. Cubic shares remain over 8 percent lower since the earnings report.

"While the print was disappointing owing to timing of orders and elevated investment activity, we believe the magnitude of the sell-off is overdone," wrote JPMorgan analyst Mark Strouse.

But Strouse now sees greater opportunity in the stock, encouraging investors to give Cubic a second chance based on valuation and upcoming catalysts.