Investing.com -- Shares of Cummins rose about 3% in premarket trading on Monday after UBS upgraded the engine and power systems manufacturer to "Buy" from "Neutral" and raised its price target to $850 from $565, citing stronger growth prospects in its power generation business and improving conditions in the North American truck market.

UBS said demand for backup power systems used in data centers should continue to drive double-digit growth in Cummins' Power Systems and Distribution segments, supported by rising spending from hyperscale data center operators and the company's ongoing capacity expansions. The broker expects power-related earnings growth to outpace current market expectations over the next several years.

The brokerage also highlighted a more favorable outlook for the truck market, pointing to improving carrier profitability, aging fleets and upcoming emissions regulations that will require new engines with additional content. UBS expects these factors to support earnings growth through 2028 despite a modest slowdown following pre-buy activity ahead of stricter emissions rules.

UBS forecasts Cummins' earnings per share to rise from about $29.90 in 2026 to $41.25 by 2028, above consensus estimates. The firm said the stock's valuation remains attractive, particularly compared with companies benefiting from data center and power infrastructure demand, and believes the market is underestimating the company's earnings potential.