Baird upgraded Caterpillar (CAT) to Outperform from Neutral with a price target of $395, up from $309. Exiting Q1, a combination of lower than normal seasonal dealer inventory build, a much better than expected backlog, and stabilization in dealer retail sales all pointed to potential fundamental improvement into 2026 for Caterpillar, the analyst tells investors in a research note. The firm says the easing of tariff impacts “adds weight” to 2025 as a trough earnings year for the company and is likely to drive additional multiple expansion for the shares. This should allow Caterpillar shares to catch up with the S&P500 after underperforming by 15% over the past year, contends Baird.
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