UPDATE: Stifel Initiates Coverage on Caterpillar with Buy Rating, $122 PT on Potential Margin Upside

In a report published Friday, Stifel analyst Robert Connors initiated coverage on Caterpillar CAT with a Buy rating and $122.00 price target. In the report, Stifel noted, “Caterpillar's cycles have two acts and we see a back-half recovery this cycle with a North American focus. In addition, we believe seasonal tailwinds, a rebound in commodities on global GDP optimism, and prolonged easy Fed policy should favor CAT stock right now. Also, we see a North American heavy (public & private) construction cycle as well as oil & gas as the catalysts for a late cycle recovery to fill the void that mining has left. We see potential margin upside as pricing recovers due to fewer dealer inventory reductions, continued cost controls, increased aftermarket exposure, as well as benign steel pricing. Complementing margin recovery, the company has a history of instituting large stock buybacks in the latter half of the cycle.” Caterpillar closed on Thursday at $101.30.