Caterpillar (CAT – Research Report), the Industrials sector company, was revisited by a Wall Street analyst today. Analyst Tami Zakaria from J.P. Morgan maintained a Buy rating on the stock and has a $385.00 price target.
Tami Zakaria assigned a Buy rating to Caterpillar’s stock based on a confluence of growth drivers expected to propel the company’s performance in the coming years. One significant factor is the anticipated acceleration in earnings growth post-2024 due to infrastructure investment in the United States, with the Infrastructure Investment and Jobs Act (IIJA) and the CHIPS and Inflation Reduction Act (IRA) likely contributing to considerable sales growth across Caterpillar’s segments. Furthermore, the potential recovery of key markets such as Europe and China, which together represent about a quarter of the company’s sales, is expected to bolster overall revenue, with China in particular predicted to experience a strong rebound in construction equipment volumes.
Moreover, Zakaria’s optimism extends to the Energy & Transportation (E&T) outlook, where increased capital expenditure from major oil and gas companies and sustained demand from data centers could provide a multi-year tailwind. The consistent growth of Caterpillar’s services sector, which is largely independent of end market performance, is also projected to significantly contribute to sales growth. Additionally, Caterpillar’s ability to control inventory effectively positions it to meet end user demand efficiently in 2024. From a valuation perspective, potential multiple expansions driven by the Federal Reserve’s expected interest rate cuts provide a favorable outlook for the stock’s performance, supporting the Buy rating and the anticipation of a positive pricing environment for Caterpillar.
In another report released yesterday, TD Cowen also reiterated a Buy rating on the stock with a $300.00 price target.
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Caterpillar (CAT) Company Description:
Founded in 1925, Illinois-based Caterpillar, Inc. manufactures construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. It operates through the following segments, including Construction Industries, Resource Industries, Energy and Transportation, Financial Products, and All Other.
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