Shares of global truck maker Paccar (PCAR) are rallying against the grain of a declining broader market after a positive note out of UBS.

UBS TRUCK SURVEY: According to UBS' latest survey, trucking companies are "incrementally more positive." Approximately 55% of the respondents see business conditions improved over last year. Approximately 70% of the survey respondents also see freight demand to improve in the second-half of the year with around 75% expecting truckload capacity to tighten over the next 12 months. About 80% see used truck prices to increase or remain flat in the second half of 2017. "We think the combination of increased freight demand and tighter truckload capacity could result in additional truck purchases," said UBS analyst Steven Fischer in the note. Fischer sees the potential for truckers to bump up truck purchases as the year progresses. A healthy metric for June Class 8 preliminary orders, up approximately 40% compared to May's up 19%, is noted in the report. Activity in residential construction and in non-auto durable goods will drive freight growth in the second half, said Fischer. The analyst is also constructive on certain categories of machinery, including compact construction equipment, and potentially aerial work platforms. Fischer reiterated the firm's $75 price target and Buy rating.

RETURN ON CAPITAL: In mid June, Goldman analyst Jerry Revinch upgraded Paccar to Buy and maintained a $79 price target saying he is positive on the company's prospects to further improve its industry-leading returns on capital. Revinch said he saw upside to consensus estimates driven by U.S. engines generating aftermarket sales and manufacturing footprint expansion slowing, at the time the note was out. From a cyclical standpoint, he said he expects electronic logging standards in the U.S. to drive a re-acceleration in the U.S. truck cycle in 2018.

PRICE ACTION: Shares of Paccar are up almost 2% to $67.69 in midday trading. OTHERS: Shares of Paccar rival Navistar International (NAV) are higher by 2% to $27.01. Truck engine maker Cummins (CMI) is up 0.72% to $165.28.