UBS Raises Target Price and Estimates on Caterpillar (CAT) (Update)

Update (9:47 a.m.): Updated with Tuesday market open information.

NEW YORK (TheStreet) -- UBS raised its target price and estimates on Caterpillar  (CAT) and the firm now sees shares reaching $99. UBS also raised its estimates for 2015 and set a "neutral" rating. The firm cited better revenues, high operating margins and a positive tone on mining as the reasons for its increase.

BMO Capital also said it now sees Caterpillar shares reaching $96 and set a "market perform" rating. The firm said the company is seeing higher demand and is buying back more stock.

The stock was moving up 0.47% to $91.72 in early morning trading on Tuesday.

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Separately, TheStreet Ratings team rates CATERPILLAR INC as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate CATERPILLAR INC (CAT) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has significantly increased by 140.47% to $3,018.00 million when compared to the same quarter last year. In addition, CATERPILLAR INC has also vastly surpassed the industry average cash flow growth rate of 29.61%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 22.1%. Since the same quarter one year prior, revenues fell by 18.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Machinery industry and the overall market, CATERPILLAR INC's return on equity exceeds that of both the industry average and the S&P 500.
  • CATERPILLAR INC's earnings per share declined by 42.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CATERPILLAR INC increased its bottom line by earning $8.49 versus $7.39 in the prior year. For the next year, the market is expecting a contraction of 35.3% in earnings ($5.50 versus $8.49).
  • The share price of CATERPILLAR INC has not done very well: it is down 8.65% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • You can view the full analysis from the report here: CAT Ratings Report

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