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Caterpillar hit with double-downgrade by analysts at UBS

By Iain Gilbert

Date: Tuesday 26 Feb 2019

Caterpillar hit with double-downgrade by analysts at UBS

(Sharecast News) - Caterpillar shares fell at the open following a double-downgrade to 'sell' by analysts over at UBS.
UBS stripped Caterpillar of its previous 'buy' rating and dropped its 12-month price target to $125 from its previous $154 mark, citing slowing demand in construction across the globe.

"We believe 55% of CAT's end markets will peak in 2019, pressuring revenue and margins in 2020 as demand declines," wrote UBS analyst Steven Fisher.

"We expect 2020 EPS to decline 8% year-on-year, as continued growth in mining and buybacks will not be enough to offset headwinds in construction and oil and gas."

The downgrade follows Caterpillar's disappointing fourth-quarter earnings, its worst miss in ten years, fueled by slowing demand in China and the US' tit-for-tariff war with the Asian superpower.

"We will continue to monitor the situation but as of now, we are forecasting the overall China market to be roughly flat in 2019 following two years of significant growth. China represents about 10% to 15% of our total Construction Industries sales and about 5% to 10% of total Caterpillar sales and revenue," said chief executive Jim Umpleby on 28 January.

Over the last twelve months, Caterpillar shares had shed nearly 11% of their value but have rallied more than 26% from their October lows of late.

As of 1550 GMT, Caterpillar shares were down 2.28% at $138.18 each.

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