Caterpillar Inches Higher on Upgrade to Buy at Goldman Sachs

Shares of Caterpillar are upgraded at Goldman Sachs, which sees the company’s long-awaited rebound finally starting to gain traction.
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Shares of manufacturing bellwether Caterpillar  (CAT) - Get Report inched higher on Thursday after receiving an upgrade from analysts at Goldman Sachs, who raised their rating and one-year price target on the stock on expectations that the company’s long-awaited rebound is about to gain traction.

In a research note to clients, Goldman Sachs analyst Jerry Revich upgraded Caterpillar to buy from neutral and raised his one-year price target to $168 from $156 amid what he sees as “… tightening U.S. construction equipment capacity utilization and dealer inventories and backlog approaching trough levels,” among other positives.

The upgrade follows Caterpillar’s recent quarterly earnings report, where it revealed stronger-than-expected earnings for the fourth quarter, though tamped down its 2020 profit forecasts amid what it sees as "continued global economic uncertainty."

It also marks a pivot for one of the company’s long-time bullish Wall Street supporters. Revich last August downgraded the heavy equipment giant to neutral from buy and lowered his target price by almost 20% to $130 after maintaining a buy rating on the stock since late in 2016.

In its most recent quarter, Caterpillar said adjusted earnings were $2.63 a share, up 3.13% from the same period last year and firmly ahead of the Wal Street consensus forecast of $2.37 a share. Sales were $13.14 billion, down 8.4% from the year-ago quarter and short of analysts' forecasts of $13.4 billion.

Looking into 2020, Caterpillar said its sees adjusted profits in the range of $8.50 to $10 a share.

Caterpillar ended the trading day Wednesday up 2.5% at $139.59. They were down slightly at $139.50 in premarket trading on Thursday.