UPDATE: Bank of America Upgrades Caterpillar Following Visit to SOLAR Turbine Facility

In a report published Monday, Bank of America analyst Ross Gilardi upgraded the rating on Caterpillar CAT from Neutral to Buy, and raised the price target from $87.00 to $100.00. In the report, Bank of America noted, “We upgrade Caterpillar to Buy on the back of our recent visit to its SOLAR turbine facility in San Diego, CA and a deeper dive analysis of the Power Systems (PS) business. CAT's preliminary outlook for a flattish PS top line outlook in 2014 feels conservative to us, and positive growth in the segment should help underpin EPS of at least $4.50-5.00 in 2014, a worst case scenario in our view. With the downturn in mining and construction, PS will be the biggest (nearly 50%) source of operating earnings into 2014. We think earnings are well supported by rising global production of oil and gas (40% of sales), growing E&P investment, SOLAR aftermarket, and robust data center growth. Electric Power markets are soft, but we see prospects for rail, marine, and industrial to grow next year.” Caterpillar closed on Friday at $82.88.