Home Stock Caterpillar stock outlook: Bernstein sees a 20% upside

Caterpillar stock outlook: Bernstein sees a 20% upside


Shares of Caterpillar Inc (NYSE: CAT) are now down about 18% from their year-to-date high in mid-May, but Bernstein says there’s light at the end of the tunnel.

Caterpillar upgraded to ‘outperform’

In a research note this morning, Bernstein’s Chad Dillard upgraded Caterpillar to “outperform” with a price target of $240 that represents a 20% upside from here. The analyst wrote:

The market is treating CAT like it’s late-cycle, despite the fact that over 75% of the business is mid-cycle or earlier, and it will be a key beneficiary of a rebound in China/global growth. The path is clearing for the stock to outperform over the next twelve months.

Dillard doesn’t expect the machine upgrade cycle to end in 2022. He also recalled that names like Caterpillar usually perform well when rates start to go up. In its latest reported quarter, the world’s largest equipment manufacturer blew past Street estimates for earnings, but revenue fell short.

Jim Cramer sees Caterpillar as inexpensive

On CNBC’s “Squawk on the Street”, Jim Cramer also agreed with the bullish call and said the stock was “too cheap” at current levels.

Caterpillar is levered to oil, and oil is up. We have road buildings, we have infrastructure, Caterpillar is the one. Jim Umpleby is terrific; he has a new caterpillar. They’re returning capital, they’re like the oil companies. Caterpillar is no longer reckless. So, I think it’s a really good call.

Earlier in December, Deutsche Bank’s Nicole Deblase also reiterated his “buy” rating on Caterpillar and raised his price target to $242 a share. Cowen’s Matt Elkott has the stock on his list of top ideas for 2022 as well.

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