Analyst Favors Caterpillar Over Deere As Machinery Markets Near Trough Levels

Bank Of America Securities analyst Michael Feniger retained a Buy rating on Caterpillar, Inc. (NYSE:CAT) with a price forecast of $650.

The analyst presented key takeaways for the company based on rival Deere & Company’s (NYSE:DE) earnings reported last week.

Deere Earnings Snapshot

• The heavy machinery maker reported earnings per share of $3.93, beating the consensus of $3.88.
• It reported an 11% year-over-year (Y/Y) increase in quarterly sales to $12.39 billion, beating the consensus of $9.85 billion.
• Deere expects fiscal 2026 net income of $4.0 billion to $4.75 billion, implying a year-over-year decline of 20% to 5.5%.

Recent Caterpillar Earnings

In October, Caterpillar’s third-quarter 2025 results topped Wall Street expectations, driven by strong demand across key business segments.

Sales and revenues climbed 10% year over year to $17.64 billion, beating analyst estimates of $16.77 billion, and adjusted earnings per share came in at $4.95, ahead of the $4.52 estimate.

The company expects 2025 full-year sales and revenues to be modestly higher than those in 2024, with full-year services revenues approximately flat compared to the prior year.

Full-year incremental tariff costs are expected to be in the range of $1.6 billion to $1.75 billion.

Also Read: These Analysts Revise Their Forecasts On Deere After Q4 Results

Analyst View On Caterpillar

The analyst writes that he sees the bearish view on CAT's construction pricing weakening (CI: Q2 -7%, Q3 -4%, Q4E flat), as Deere guides construction & forestry (C&F) pricing up 3% in FY26.

While this doesn't signal a construction boom (DE guides C&F sales +10% in FY26, with earthmoving in the mid-teens), it reflects the "torque" of underproduction combined with strong retail sales (DE expects first-quarter C&F sales +20%), adds the analyst.

Meanwhile, Deere’s North American earthmoving equipment inventories remain tight at -35%, notes the analyst.

Feniger says that the investors have questioned CAT's valuation at 24x 2026 BofA EPS, while DE trades at 29x its FY26 EPS guide of ~$16, providing a rough "anchor" for what the market may pay for trough machinery.

Although CAT's valuation isn't cheap versus its historical 10–30x range, its machinery markets (mining, construction) are at trough levels, supporting a recovery multiple, says the analyst. The analyst favors Caterpillar over Deere.

Price Action: CAT shares are down 0.44% at $573.40 at the last check on Monday.

Read Next:

• Deere Braces For $1.2 Billion Tariff Impact In Fiscal 2026, Large Tractor Inventory Hits 17-Year Low

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