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Jefferies: Aftermarket Demand Appears To Have Stabilized

Jefferies LLC reports that aftermarket demand appears to have stabilized in late May and early June, as drier and warmer weather has returned following weather headwinds in late April and much of May tied to record rainfall in 2019 and record heat in May 2018. The story of the 2019 second quarter will be year-over-year weather comps, according to Jefferies’ “June ’19 Monthly Tune-Up” report.

“Notably, there does appear to be some regional dispersion, as a recent Southeast/Southcentral heat wave appears to be driving more significant recovery versus still ‘wet’ trends in Central states,” analysts Bret Jordan, Mark Jordan and Ethan Huntley wrote in their report. “We view the positive correlation to weather as an indicator that underlying service demand remains favorable, rather than recent weakness being an indicator of structural decline.”

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