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Why Many Analysts Cut Caterpillar’s Target Price after Q3 Results

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Analyst consensus on Caterpillar

29 analysts are actively tracking Caterpillar (CAT). 59% have given the stock a “buy” recommendation, 34% have suggested a “hold,” while 7% of the analysts recommend a “sell” for Caterpillar.

The analyst consensus target for CAT is $159.23, implying a return potential of 32.2% over the closing price of October 23. After Q3 2018 earnings, CAT’s stock price has plummeted as the pressure of the increase in raw material prices, logistical costs, and China’s growth concerns have weighed heavily on the stock. Wall Street, which was expecting an upward revision to its fiscal 2018 revenue and earnings, was disappointed. The lack of an upward revision likely caused several analysts to cut their target prices on Caterpillar.

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Who has cut target prices on Caterpillar?

  • Morgan Stanley (MS) cut the target price of Caterpillar to $169 from the previous recommendation of $187. The target still implies a return potential of 42% over the October 23 closing price.
  • Jefferies (JEF) rated Caterpillar as a “hold” and cut the target price to $130 from $155, implying a return potential of 9.3% over the closing price as of October 23.
  • Credit Suisse (CS) rated Caterpillar as “outperform” but cut the target price of Caterpillar to $183 from the previous recommendation of $205.

Investors can hold Caterpillar indirectly by investing in the Invesco S&P 500 Equal Weight Industrials ETF (RJI). DJD has invested 1.3% of its portfolio in Caterpillar stock as of October 23.

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