Bank of America Merrill Lynch Mixed on Caterpillar amid concerns of declining demand for construction equipment

Bank of America Merrill Lynch issued a company update on Caterpillar Inc.

saying that while its lean manufacturing initiatives and free cash flow are positive there concerns over demand trends for their equipment. Currently Bank of America rates Caterpillar as Neutral with a $85 price target. Analysts Ross Gilardi and Michael Feigner wrote 7 key takeaways following a conference with Caterpillar executives: 1. Caterpillar will not hesitate to make a $1-2 billion acquisition in the areas of oil/gas, rail services, and marine. 2. While North America construction is becoming more competitive, Caterpillar sees dealer restocking and pockets of better infrastructure spending in the upcoming months. 3. There are little to no signs of mining aftermarket recovery. 4. Caterpillar believes that they have the strongest dealer network in the industry. 5. Caterpillar will remain selective on capacity closures. 6. States that are high in producing energy account for a large portion of construction activity. 7. Gas compression revenue trends are stable for 2015. Currently Caterpillar Inc. is trading at $79.10, up 0.83 percent.