Analysts’ consensus

Analysts’ interest in Caterpillar (CAT) has been increased since its second-quarter earnings. The analysts tracking Caterpillar increased from 27 to 30. Among the analysts, 60% recommend a “buy,” 33% recommend a “hold,” and 7% recommend a “sell.”

Caterpillar: More Analysts Favor a ‘Buy’

Overall, analysts’ consensus on Caterpillar has indicated a target price of $168.10, which implies a return potential of 7.75% over the closing price on September 20. In the past three months, analysts have reduced Caterpillar’s target price from $172.4 to $168.10.

Caterpillar posted strong second-quarter earnings. The company reported an adjusted EPS of $2.97 and beat analysts’ expectations of $2.73 per share. The company increased its fiscal adjusted EPS guidance. The new guidance is $11.0–$12.0 compared to the earlier guidance of $10.25–$11.25. Continued demand growth is seen as the primary factor for the revision.

Brokerages’ recommendations

  • Oppenheimer rated Caterpillar as “perform” but didn’t provide a target price.
  • Deutsche Bank (DB) rated Caterpillar as a “buy” and recommended a target price of $177, which implies a return potential of 13.5% over the closing price as of September 21.
  • UBS (UBS) rated Caterpillar as a “buy” and recommended a target price of $185.00, which implies a return potential of 18.6% over the closing price as of September 21.

Investors could hold Caterpillar indirectly by investing in the Invesco Dow Jones Industrial Average Dividend ETF (DJD). DJD has invested 2.4% of its portfolio in Caterpillar stock as of September 20. The fund also provides exposure to 3M (MMM) with a weight of 2.7%.

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