** Shares of Paccar PCAR.O dip 0.4% to $100.72 early Tues after UBS downgrades to 'neutral' from 'buy', saying policy dynamics put a recovery in doubt

** UBS cuts PT from $124 to $108 vs Wall Street median of $115, LSEG data shows

** With uncertainty for government policy on both tariffs and truck emissions regulations, UBS say it's increasingly cautious on prospects for rebound in truck demand in 2025

** UBS says it previously anticipated a rebound in second half of this year, driven by a freight recovery and a "pre-buy" of heavy duty trucks ahead of stricter emissions regulations in 2027

** New PT reflects 12.5x P/E on now lower 2026E EPS of $8.65, vs prior estimate of $9.95, UBS says

** Shares of PCAR and peers fell last week after the U.S. Environmental Protection Agency said it's beginning effort to reverse Biden administration's vehicle emission rules that would force automakers to build a rising number of electric vehicles

** Of 21 brokerages covering PCAR, recommendation breakdown is 7 "strong buy" or "buy", 12 "hold" and 2 "sell" or "strong sell"

** With move on the session, stock off ~3% YTD. This compares to nearly 6% drop in the S&P 500 Construction Machinery & Heavy Transportation Equipment sub-index .SPLRCMCHD, while S&P 500 Industrials sector .SPLRCI is down fractionally in 2025

(Lance Tupper is a Reuters market analyst. The views expressed are his own)

((lance.tupper@tr.com 1-646-279-6380))