Morgan Stanley analyst Angel Castillo reiterated a Sell rating on Caterpillar today and set a price target of $380.00.
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Angel Castillo has given his Sell rating due to a combination of factors that highlight concerns about Caterpillar’s current market valuation and future earnings potential. Despite acknowledging the company’s strong business fundamentals and long-term growth prospects, Castillo points out that market expectations have surpassed these fundamentals, leading to a situation where the stock is priced for perfection.
Castillo emphasizes that while Caterpillar’s projected sales growth and margin improvements are commendable, there are significant risks that could lead to earnings falling short of expectations. These include the back-end loaded nature of capacity expansions, particularly in turbines, and ongoing tariff challenges. Additionally, the anticipated earnings per share by 2027 are projected to be significantly lower than consensus estimates, raising concerns about potential downward revisions. As a result, Castillo maintains a cautious stance, reiterating a Sell rating due to the perceived downside risks.
Castillo covers the Industrials sector, focusing on stocks such as Caterpillar, Agco, and REV Group. According to TipRanks, Castillo has an average return of -1.6% and a 50.37% success rate on recommended stocks.