Bernstein analyst Chad Dillard maintained a Hold rating on Caterpillar today and set a price target of $447.00.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Chad Dillard has given his Hold rating due to a combination of factors impacting Caterpillar’s financial outlook. The company has revised its tariff cost expectations upwards, which is expected to create a significant EBIT headwind. This increase in costs is primarily driven by the Section 232 tariffs on steel and aluminum, as well as tariffs from India, affecting mainly the Construction industries segment.
Despite these challenges, Caterpillar’s sales and revenue expectations remain unchanged. However, the company needs to raise prices by 5% to recover the $3 billion in annualized tariff costs, which could lead to a substantial operating margin headwind if not achieved. While there is potential for price recovery due to low channel inventories and healthy end-market demand, the recent record margin levels may normalize due to these tariffs. As a result, Chad Dillard believes that while Caterpillar can recover some of the tariff costs, the overall outlook warrants a Hold rating.
Based on the recent corporate insider activity of 84 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of CAT in relation to earlier this year.