Caterpillar (CAT) - Get Report shares traded lower Tuesday after the investment bank UBS cut its rating on the industrial equipment maker and cautioned that revenue and earnings forecasts will be pressured in a slowing global economy.

UBS lowered it rating on Caterpillar shares to "sell" from "buy", and cut it price target by around 20% to $125 per share, as it argued that key revenue drivers for the Peoria, Illinois-based group, including construction markets in North America and China as well as oil and gas production, will peak in 2019. That likely means earnings forecasts for 2020, which sit at a consensus of $13.27 per share and imply 8% year-on-year growth, are too high.

"We expect 2020 EPS to decline ~8% year-on-year, as continued growth in mining and buybacks will not be enough to offset headwinds in construction and oil and gas, in our view," UBS analyst Steven Fisher wrote. "We do not believe an earnings decline in priced in to the stock. We expect downward earnings revisions to pressure the stock over the next 12 months."  

Caterpillar shares, one of the more heavily-weighted components of the Dow Jones Industrial Average, fell 2.6% to $137.76 on Tuesday.

Last month, Caterpillar cast a pall over the busiest week of the fourth quarter earnings season when it posted weaker-than-expected fourth quarter earnings and forecast a "modest" in increase in 2019 sales it linked to weakening demand in China. 

Caterpillar also said it expects 2019 profit to increase to a range of $11.75 to $12.75 per share, compared to the Refinitiv consensus forecast of $12.73 per share, while the warning sent shares down more than 9%, the biggest single-day decline in nearly 10 years.

Caterpillar was also named as a potential target for European Union officials if President Donald Trump decides to impose tariffs on European automakers later this year, according to a recent report from Bloomberg.