UBS Raises Price Target on Caterpillar (CAT) to $76 Following 1Q Results

UBS reiterated a Neutral rating on Caterpillar (NYSE: CAT), and raised the price target to $76.00 (from $61.00), following the company's 1Q earnings report. Pricing was a 1.8% headwind in 1Q16, which accelerated from the -0.9% realized in 4Q15 and is the weakest since at least 2003. Chinese construction orders improved in 1Q16, but this could have been driven by legacy stimulus projects and emissions related pre-buys.

Analyst Steven Fisher commented, "At ~21x 2016 guidance, CAT's forward P/E implies an earnings inflection. On the 1Q16 call, CAT highlighted several green shoots: Chinese construction orders improved, commodity prices are rallying, Bauma orders were better than expected, and guidance implies pricing improvement in 2H16. While we think there are some near-term reasons for optimism, we are less certain that they are going to produce an earnings inflection. We think there is still downside risk to CAT's 2016 guidance, and we expect ongoing pricing headwinds and cyclical and other pressures in oil/gas, transportation, mining and possibly construction to lead to a modest EPS decline in 2017."

For an analyst ratings summary and ratings history on Caterpillar click here. For more ratings news on Caterpillar click here.

Shares of Caterpillar closed at $78.32 yesterday.

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