Caterpillar (NYSE:CAT) Cut to Hold at Robert W. Baird

Key Points

• Robert W. Baird downgraded Caterpillar from “strong buy” to “hold” and cut its price target to $900, citing concerns about backlash against data-center construction and the durability of AI-related demand.
• Caterpillar shares were down 7% and opened at $782.32, although analysts’ overall consensus remains “Moderate Buy” with an average price target of $966.29.
• The company recently exceeded quarterly expectations, reporting $5.54 in EPS and $17.41 billion in revenue, while revenue rose 22.2% year over year; insiders have also sold roughly $87.6 million of stock over the past 90 days.

Caterpillar (NYSE:CAT - Get Free Report) was downgraded by equities research analysts at Robert W. Baird from a "strong-buy" rating to a "hold" rating in a research report issued to clients and investors on Wednesday,Zacks.com reports.

A number of other brokerages have also recently commented on CAT. Erste Group Bank cut Caterpillar from a "buy" rating to a "hold" rating in a research note on Monday. DA Davidson raised their price objective on shares of Caterpillar from $650.00 to $845.00 and gave the company a "neutral" rating in a report on Monday, May 4th. JPMorgan Chase & Co. boosted their target price on shares of Caterpillar from $1,125.00 to $1,165.00 and gave the stock an "overweight" rating in a report on Wednesday, June 17th. Daiwa Securities Group lifted their price target on shares of Caterpillar from $790.00 to $900.00 and gave the stock a "neutral" rating in a report on Friday, May 1st. Finally, Evercore reissued an "outperform" rating and issued a $1,103.00 price objective on shares of Caterpillar in a research note on Monday, May 11th. Thirteen analysts have rated the stock with a Buy rating and twelve have given a Hold rating to the company's stock. Based on data from MarketBeat.com, Caterpillar has an average rating of "Moderate Buy" and a consensus price target of $966.29.

Caterpillar Stock Down 7.0%

Shares of NYSE CAT opened at $782.32 on Wednesday. The company has a market cap of $360.33 billion, a price-to-earnings ratio of 38.94, a PEG ratio of 1.65 and a beta of 1.57. The company has a current ratio of 1.35, a quick ratio of 0.81 and a debt-to-equity ratio of 1.64. Caterpillar has a 12 month low of $405.46 and a 12 month high of $1,073.46. The stock has a 50-day moving average price of $926.90 and a two-hundred day moving average price of $810.15.

Caterpillar (NYSE:CAT - Get Free Report) last announced its quarterly earnings results on Thursday, April 30th. The industrial products company reported $5.54 earnings per share (EPS) for the quarter, beating the consensus estimate of $4.65 by $0.89. Caterpillar had a net margin of 13.33% and a return on equity of 48.21%. The company had revenue of $17.41 billion for the quarter, compared to analyst estimates of $16.53 billion. During the same period in the previous year, the firm posted $4.25 EPS. The firm's revenue was up 22.2% on a year-over-year basis. As a group, analysts forecast that Caterpillar will post 24.87 earnings per share for the current fiscal year.

Insider Activity at Caterpillar

In other Caterpillar news, CAO William E. Schaupp sold 360 shares of the stock in a transaction dated Wednesday, May 13th. The stock was sold at an average price of $906.00, for a total transaction of $326,160.00. Following the completion of the sale, the chief accounting officer directly owned 530 shares in the company, valued at approximately $480,180. This trade represents a 40.45% decrease in their position. The sale was disclosed in a legal filing with the SEC, which is accessible through this link. Also, insider Denise C. Johnson sold 12,605 shares of Caterpillar stock in a transaction dated Thursday, May 14th. The stock was sold at an average price of $907.91, for a total value of $11,444,205.55. Following the completion of the transaction, the insider directly owned 49,825 shares of the company's stock, valued at approximately $45,236,615.75. This trade represents a 20.19% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. Insiders sold a total of 95,773 shares of company stock valued at $87,642,635 over the last 90 days. 0.33% of the stock is owned by company insiders.

Institutional Investors Weigh In On Caterpillar

Hedge funds have recently added to or reduced their stakes in the business. Vanguard Group Inc. increased its stake in shares of Caterpillar by 1.0% in the 4th quarter. Vanguard Group Inc. now owns 46,385,185 shares of the industrial products company's stock valued at $26,572,681,000 after acquiring an additional 442,164 shares in the last quarter. State Street Corp boosted its stake in Caterpillar by 1.1% during the fourth quarter. State Street Corp now owns 35,388,550 shares of the industrial products company's stock worth $20,273,039,000 after acquiring an additional 385,204 shares in the last quarter. Geode Capital Management LLC grew its holdings in Caterpillar by 0.9% in the fourth quarter. Geode Capital Management LLC now owns 10,610,182 shares of the industrial products company's stock worth $6,072,572,000 after purchasing an additional 94,524 shares during the period. Fisher Asset Management LLC grew its holdings in Caterpillar by 0.6% in the fourth quarter. Fisher Asset Management LLC now owns 9,493,266 shares of the industrial products company's stock worth $5,438,408,000 after purchasing an additional 54,069 shares during the period. Finally, Bank of America Corp DE increased its stake in Caterpillar by 16.0% in the fourth quarter. Bank of America Corp DE now owns 6,738,802 shares of the industrial products company's stock valued at $3,860,457,000 after purchasing an additional 928,974 shares in the last quarter. 70.98% of the stock is currently owned by institutional investors.

Key Headlines Impacting Caterpillar

Here are the key news stories impacting Caterpillar this week:

• Positive Sentiment: Caterpillar announced an investment of up to $10 million in Illinois as part of its five-year, $100 million workforce initiative. The program will support training and recruitment for manufacturing and industrial technician jobs, potentially strengthening the company’s long-term labor pipeline. Caterpillar Invests in the Future of Manufacturing Talent in Illinois
• Positive Sentiment: Some analysts and market commentators remain constructive ahead of Caterpillar’s upcoming earnings report. Zacks upgraded the stock to a Rank #2, citing improving earnings prospects and the potential for an earnings beat. What Makes Caterpillar a New Buy Stock
• Neutral Sentiment: Caterpillar is scheduled to be among next week’s closely watched earnings reports. Investors will focus on order trends, demand, margins, tariffs and whether data-center-related generator sales can offset broader concerns. The Week Ahead: Jobs Data, Top 10 Earnings Reports to Watch
• Neutral Sentiment: Recent coverage highlights Caterpillar’s exposure to technology companies building artificial-intelligence data centers, where its generators can provide backup power and speed construction timelines. Satya Nadella’s Microsoft Needs Power. Joe Creed’s Caterpillar Sells It.
• Negative Sentiment: Baird downgraded CAT to Hold from Buy and cut its price target by $300 to $900. Analyst Mig Dobre cited growing public and political backlash against data-center construction, raising concerns about the durability of AI-related demand that has helped support the stock’s rally. Caterpillar Is Downgraded on Growing Data Center Buildout Backlash
• Negative Sentiment: Valuation concerns are amplifying the downgrade. Commentary noted that Caterpillar trades at a substantial premium to its historical valuation, leaving less room for disappointment if growth expectations or data-center spending cool. Caterpillar Trades at Three Times Its Historical Multiple
• Negative Sentiment: Additional risks include possible supply-chain pressure from China’s rare-earth export restrictions, which could raise costs or complicate sourcing of components used in advanced equipment. Caterpillar Faces Rare Earth Squeeze

About Caterpillar

Caterpillar Inc is a global manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and locomotives. The company's product portfolio includes earthmoving machines such as excavators, bulldozers, wheel loaders and off‑highway trucks, as well as a range of power generation products including generator sets and power systems for industrial and commercial use. Caterpillar serves customers across heavy construction, mining, energy, transportation and related industries with both equipment and integrated technology solutions.

In addition to manufacturing, Caterpillar provides a broad range of aftermarket parts and support services, including maintenance, repair, remanufacturing and fleet management tools.

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