UBS trims its price target on Caterpillar (NYSE: CAT) from $109 to $104 while maintaining a Neutral rating on the stock.

Analyst Steven Fisher noted the following points following Q3 results released today:

Analysis of end markets suggests revenues range-bound in 2015

Indicators for CAT's key businesses suggest to us that top line growth could be muted in 2015. Lower iron ore and coal prices, with flat copper prices over the last several months leave us cautious on Resources. Weak Chinese excavator sales, anaemic European construction, and tougher comps in the US non-res market suggest slower growth in Construction. Indicators are mixed for E&T. FX and falling oil prices could represent risk to the downside.

UBS CAT Pulse monthly indicator slipping to mid-point

We have created an indicator, the UBS CAT Pulse, to help assess the overall trend in CAT's business. The CAT Pulse indicator has been choppy in recent months, but has been slipping towards 50 (a reading above 50 indicates growth/improvement). Amongst the indicators comprising the CAT Pulse, European Production & Construction and Chinese Excavator sales have been the primary decliners since the February peak; however, the majority of our indicators have declined over the last six to eight months.

Dealers cautiously optimistic, but rental business remains key

We recently met with construction equipment dealers in the Northeast. After a strong Q4 2013, optimism was high for a robust 2014 in construction equipment, but the year has been mixed. In the region we visited, sales activity is running below expectations (new sales net lower YoY), but rental has been solid. Some commercial and industrial activity is picking up, but housing and infrastructure remain subdued. Growth in TX, FL, CO is strong. Expectations for 2015 are for modest growth. Dealers we met with indicated that the rental option has become increasingly important for their businesses.

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Caterpillar closed at $94.57 yesterday.