Market Overview

Is CAT On Its 9th Life?

Is CAT On Its 9th Life?
Related CAT
Jim Chanos Is Still Bearish On Caterpillar
10 Notable Stocks Trading Ex-Dividend Thursday, October 20

Self-described long-term Caterpillar Inc. (NYSE: CAT) bulls at Barclays asked Tuesday morning whether the global machinery maker's stock is going to roll over and die or is poised for another run higher. Barclays stayed on the bull side, arguing that Caterpillar can do better in the current environment. Here's why.

Barclays reiterates its Overweight rating on the stock with a $90 price target. Caterpillar was pinned at $81 at the open, more than 10 percent below Barclays price target.

High Dividend Yield, Lower Capex And High Free-Cash Yield

Barclays argued that the trifecta of indicators – dividend yield, capex and free-cash yield – have been "good buy signals" when around current levels.

But, There's More Caterpillar Can Do

Barclays said that Caterpillar should be more aggressive in restructuring and smarter in its capital allocation. The analysts recommended "more aggressive buybacks and a smaller footprint," suggesting that these could add 10 percent to 2016 EPS estimates.

Caterpillar Will Do Well In "Re-Inflation" Story

As global monetary policy remains dovish, Barclays said it expects Caterpillar shares to do well. In fact, the analysts noted that "small positive changes" in any weak business segments could "translate to sizeable incremental margin upside."

Image credit: Ruth Hartnup, Flickr

Latest Ratings for CAT

Oct 2016BarclaysMaintainsEqual-Weight
Oct 2016JefferiesMaintainsHold
Oct 2016Goldman SachsUpgradesNeutralBuy

View More Analyst Ratings for CAT
View the Latest Analyst Ratings

Posted-In: BarclaysAnalyst Color Top Stories Analyst Ratings Best of Benzinga


Related Articles (CAT)

View Comments and Join the Discussion!