Caterpillar Downgraded To Sell From Buy At UBS

UBS analyst Steven Fisher double downgraded Caterpillar (CAT) to Sell from Buy and cut his price target for the shares to $125 from $154. The stock closed yesterday up $2.80 to $141.41.

The analyst believes ~55% of Caterpillar's end markets will peak in 2019, pressuring revenue and margins in 2020 as demand declines. Continued growth in mining and share buybacks will not be enough to offset headwinds in construction and oil and gas, Fisher tells investors in a research note. He expects Caterpillar's earnings will decline 8% year-over-year in 2020 and believes this is not priced into the shares.

Consensus earnings estimates, which imply 8% year-over-year earnings growth in 2020, are 16% too high, says Fisher. As such, he expects downward earnings revisions to pressure Caterpillar shares over the next 12 months. 
 

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