Vetr Top Raters Downgrade Caterpillar, But Why?

Shares of Caterpillar Inc. CAT sank to a new 52-week low of $56.91 on Wednesday and the stock is now lower by 16 percent since the start of 2016 and by 32 percent over the past year.

The Vetr crowd likely recognized the stock's ongoing weakness and downgraded its rating to 3.5-stars from a prior rating of 4.0-stars. Despite a downgrade, 90 percent of the crowd's ratings are bullish and the crowd sourced price target of $63.42 implies an upside just shy of 10 percent.

Related link: Here's how crowdsourced ratings can beat the market.

"Caterpillar's exposure to China and the China-dependent mining & resources markets shouldn't be underestimated," Paul Milovanov, a member of the Vetr crowd noted. " I won't say anything new here, but since 2008, China has tried to ride out the slump in demand with massive infrastructural and other investment powered by fiscal stimulus and easy credit."

Milovanov added that even if Caterpillar's earnings "look up" in 2016, it "won't be anything like 2011."