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Is CAT On Its 9th Life?

Is CAT On Its 9th Life?
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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

Mar 2018Morgan StanleyInitiates Coverage OnOverweight
Feb 2018ArgusMaintainsBuyBuy
Jan 2018UBSMaintainsBuyBuy

View More Analyst Ratings for CAT
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