Jefferies Lowers Caterpillar Estimates Because Of Depressed End Markets

Jefferies recently issued a company note on Caterpillar Inc. CAT after recent analysis showed that the company's end markets may not be as strong as expected which would put pressure on earnings. Currently, analysts at Jefferies rate Caterpillar as a Hold while raising their price target from $63 to $69. Stephen Volkmann, an analyst at Jefferies, wrote, "We continue to believe that CAT earnings are likely to be range-bound until commodity prices recover and fleets age, which could still be several years off. Dealer retail sales have remained weak and additional inventory corrections are likely. There is the potential for modest upside opportunity from construction equipment once industrial weakness passes, though we would note there appears to be pricing pressure in the business." Analysts at Jefferies gave one key reason why they are lowering their EPS estimates for Caterpillar: 1. Lower than expected revenues: Jeffries noted that Caterpillar provided a 1Q16 revenue outlook of $9.3-$9.4 billion which is $1 billion lower than Wall Street estimates. With the expected decline in revenue, Jefferies models that full year revenue will decline as well, putting significant pressure on earnings. Currently, Caterpillar is trading at $75.43, down 0.62 percent.