Wachovia Lowers Estimates and Valuation Range on Caterpillar (CAT) Due To Further Market Weakening
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Wachovia cut estimates and its valuation range on Caterpillar (NYSE: CAT), citing channel checks which show further weakening in Europe and N American demand and pricing environment and a likely 2nd-half 2009 flattening of Electric Power demand.
The firm lowered 2008 EPS estimates on Caterpillar from $6.08 to $6.01 and 2009 EPS estimates were lowered from $6.50 to $6.25. The firm is reducing their valuation range from $78-$81 to $60-$63. They are also pushing out their N American recovery timing expectation on Caterpillar to 2010 from 2009, and is decreasing expectations for Europe, Africa and Middle East.
Analyst Andrew Casey said, "At this point, while we are concerned about the effect of increased used equipment inventory in N America and Europe on price realization, we are not including a potential deterioration effect in our estimates."
Wachovia is maintaining their Market Perform rating on Caterpillar.
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