Caterpillar (CAT) Relief Rally Not Sustainable, Says Analyst

April 22, 2013 12:48 PM EDT
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Price: $94.58 +1.29%

Rating Summary:
    11 Buy, 19 Hold, 4 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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Following Caterpillar's (NYSE: CAT) Q1 report, analysts at Wells Fargo maintained a Market Perform rating on the stock with a price target of $91-$93. Caterpillar missed consensus estimates and guidance was weak. While the stock enjoyed a relief rally, analyst Andrew Casey does not believe it is sustainable.

"Absent a sharp acceleration in global economic growth (not included in CAT's forecast), we expect global mining equipment demand will continue to be weak for the foreseeable future, and this market has been a primary driver of CAT's earnings power," said Casey.

"We continue to believe that CAT is positioned well for future reacceleration of developing market growth. However, at this point we do not have good visibility on the mining equipment cycle duration, and consequently, we continue to apply somewhat muted multiples to future earnings expectations beginning in H2 2013," added the analyst.

For an analyst ratings summary and ratings history on Caterpillar (NYSE: CAT) click here. For more ratings news on Caterpillar click here.

Shares of Caterpillar closed at $80.43 yesterday.

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