UBS Downgrades Caterpillar (CAT) Two-Notches to Sell; Sees Decline in 2020 EPS

(Updated - February 26, 2019 7:03 AM EST)

(updated to add analyst comments)

UBS analyst Steven Fisher double downgraded Caterpillar (NYSE: CAT) from Buy to Sell with a price target of $125.00 (from $154.00) as they expect 2020 EPS to decline.

Fisher believes ~55% of CAT’s end markets will peak in 2019, pressuring revenue and margins in 2020 as demand declines.

"We expect 2020 EPS to decline ~8% YoY, as continued growth in mining and buybacks will not be enough to offset headwinds in construction and oil & gas, in our view," he said.

Fisher does not believe the earnings decline is priced in to the stock.

The firm is lowering 2020 and 2021 EPS estimates by ~18% and 22%, respectively, primarily to reflect our expectations that construction and E&T revenue will begin to decline on a YoY basis in 2020.

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 $136.94 yesterday.

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