Shares of Caterpillar Inc. fell Monday, after the construction- and mining-equipment maker was downgraded by a long-time bullish analyst who said he believes they are nearing a “cyclical pivot point” following their recent strong outperformance. The stock
CAT,
-0.31%
fell 0.6% in morning trading. It was one of just 4 of the Dow Jones Industrial Average’s
DJIA,
+0.87%
30 components that were declining on the day. The shares, which had reached a record close of $264.54 two weeks ago, have run up 23.1% over the past 12 months, while the Dow has slipped 1.7% the past year.
Analyst Mircea Dobre at Baird cut his rating on the stock to neutral, after being at outperform for at least the past three years. He lowered his stock price target by 21%, to $230 from $290, with the new target implying about 6.6% downside from Friday’s closing price of $247.67. Dobre said history showed Caterpillar’s relative stock performance was driven by dealer stocking, backlog progression, the spread between prices and costs that drive margins and dealer retail sales. “We believe all four elements are likely to become headwinds” for the stock, Dobre said. While he lowered his price target to $230, he sees risk for valuation to contract toward the $180-to-$190 range, which implies 27%-to-23% downside. (Read about Caterpillar’s Q4 results, in which profits missed expectations.)
FactSet, MarketWatch
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