Market Overview

Bank Of America Mixed On Caterpillar Amid Concerns Of Declining Demand For Construction Equipment


Bank of America issued a company update on Caterpillar Inc. (NYSE: CAT) that said while its lean manufacturing initiatives and free cash flow are positive, there concerns over demand trends for their equipment. Bank of America rates Caterpillar as Neutral with an $85 price target.

Analysts Ross Gilardi and Michael Feigner wrote seven 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 it has 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.

Shares of Caterpillar recently traded at $79.13, up 0.87 percent.

Latest Ratings for CAT

Jan 2021Vertical ResearchInitiates Coverage OnBuy
Dec 2020Morgan StanleyMaintainsUnderweight
Oct 2020StifelMaintainsBuy

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