Caterpillar (CAT:NYE) UBS Securities Downgrades on Concerns of Demand Destruction

Analyst Coverage Change

Wall Street Analysts and Investors are currently growing increasingly cautious about Caterpillar (CAT), the well-known manufacturer of heavy equipment and machinery. Analysts have been voicing concerns that the company’s earnings could take a hit due to a slowing economy, which could mean a drop in sales, hurting the stock price.

UBS Securities’s (RANK#8) Steven Fisher, downgraded Caterpillar’s stock from Hold to Sell on Friday, and cut the price target for the stock from $230 to $225 per share.

Caterpillar is a cyclical company, with its results closely tied to trends in the construction and mining industries, and so Fisher believes that the current cycle is peaking and that growth in the company’s business backlog has begun to decelerate, which could result in lower earnings in the future.

Caterpillar financially has been excelling over the last few years, with its stock more than doubling over the course of the pandemic.  However, under the current macro economic climate, the company is starting to face some demand destruction.  The continuing issue of pandemic supply chain disruptions is having a significant and deferential affect on  Caterpillar.

CAT Ratings by Stock Target Advisor

CAT Stock Price Forecast & Analysis

The average target price for Caterpillar Inc over the next 12 months, based on the forecasts of 21 analysts, has the average target price at USD 237.82 per share, which suggests a potential downside of about 1% from the current stock price. The analysts’ rating for the stock is a “Hold” rating, which means that they do not recommend buying or selling the stock at this point in time.

Stock Target Advisor’s own analysis of Caterpillar Inc. is “Neutral,” based on 7 positive signals and 6 negative signals. Some of the positive signals include strong financial performance, a high dividend yield, and a low price-to-earnings ratio, while some of the negative signals include a high debt-to-equity ratio and declining revenue growth.

As of the last closing, Caterpillar Inc.’s stock price was USD 240.96, with a decline of 4.45% over the past week and 2.16% over the past month. However, over the last year, the stock has seen a significant increase of 14.86%.

 

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