Caterpillar (NYSE:CAT) Stock Falls 3.8% on Analyst Downgrade

Key Points

• Caterpillar shares fell 3.8% after Morgan Stanley cut its price target from $915 to $675 and maintained an “equal weight” rating; trading volume was about 80% above average.
• Analyst sentiment remains mixed: Truist and Oppenheimer retained bullish ratings, while RBC and Morgan Stanley lowered targets substantially. MarketBeat’s consensus rating is “Moderate Buy,” with an average price target of $927.08.
• Caterpillar reported strong third-quarter results, including 17% year-over-year revenue growth and adjusted EPS above estimates, while a roughly $78 billion backlog and data-center demand support growth. However, a slight revenue miss, unchanged full-year outlook, tariff costs, and valuation concerns have pressured investor sentiment.

Caterpillar Inc. (NYSE:CAT - Get Free Report)'s share price fell 3.8% on Friday after Morgan Stanley lowered their price target on the stock from $915.00 to $675.00. Morgan Stanley currently has an equal weight rating on the stock. Caterpillar traded as low as $616.66 and last traded at $622.73. Approximately 5,135,546 shares traded hands during mid-day trading, an increase of 80% from the average daily volume of 2,857,820 shares. The stock had previously closed at $647.39.

CAT has been the subject of a number of other reports. Truist Financial reiterated a "buy" rating and set a $1,027.00 price target (down from $1,100.00) on shares of Caterpillar in a report on Friday. Oppenheimer reiterated an "outperform" rating and set a $1,009.00 price target on shares of Caterpillar in a research report on Thursday. Royal Bank Of Canada decreased their price objective on shares of Caterpillar from $897.00 to $722.00 and set a "sector perform" rating on the stock in a report on Friday. Freedom Broker upgraded shares of Caterpillar from a "hold" rating to a "buy" rating and set a $980.00 target price for the company in a report on Thursday, September 10th. Finally, Zacks Research cut Caterpillar from a "strong-buy" rating to a "hold" rating in a research note on Monday, October 5th. Fifteen investment analysts have rated the stock with a Buy rating and twelve have assigned a Hold rating to the stock. Based on data from MarketBeat, the stock currently has an average rating of "Moderate Buy" and an average price target of $927.08.

Insider Buying and Selling at Caterpillar

In other news, CEO Joseph E. Creed sold 32,401 shares of the company's stock in a transaction that occurred on Friday, August 28th. The stock was sold at an average price of $808.98, for a total transaction of $26,211,760.98. Following the completion of the sale, the chief executive officer owned 34,555 shares in the company, valued at $27,954,303.90. This represents a 48.39% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through this link. Company insiders own 0.33% of the company's stock.

More Caterpillar News

Here are the key news stories impacting Caterpillar this week:

• Positive Sentiment: Caterpillar reported third-quarter sales and revenue of approximately $20.7 billion, up 17% year over year, while adjusted earnings per share of $7.20 exceeded the roughly $7.06 consensus estimate. Higher volume and pricing lifted margins, and the company deployed $2 billion toward dividends and share repurchases. Caterpillar Reports Third-Quarter 2026 Results
• Positive Sentiment: Demand tied to data-center infrastructure remains a major growth driver. Power-generation sales rose about 30%, and Caterpillar highlighted a record backlog of roughly $78 billion extending into 2029–2030, supporting expectations for continued revenue and margin growth. Caterpillar Posts Highest Sales Quarter Ever
• Neutral Sentiment: Several analysts still see upside from current levels. Truist reaffirmed its “buy” rating with a $1,027 target, while RBC assigned “sector perform” and Morgan Stanley assigned “equal weight.” However, both RBC and Morgan Stanley sharply reduced their targets to $722 and $675, respectively, signaling diminished confidence in near-term appreciation.
• Negative Sentiment: Revenue of $20.68 billion narrowly missed expectations of $20.76 billion, and management maintained its full-year sales outlook instead of raising it. The company expects only moderate fourth-quarter revenue growth, disappointing investors who had priced in a stronger benefit from AI-related infrastructure spending. Caterpillar Sales Jump, but Wall Street Wanted More
• Negative Sentiment: Rising tariff costs, higher inventories, extended backlog-conversion timelines and Caterpillar’s elevated valuation are adding pressure. Investors appear concerned that much of the AI-power opportunity is already reflected in the share price, making even strong results insufficient without a more optimistic forecast.

Institutional Inflows and Outflows

A number of institutional investors and hedge funds have recently added to or reduced their stakes in the company. Decker Retirement Planning Inc. lifted its stake in Caterpillar by 440.0% during the second quarter. Decker Retirement Planning Inc. now owns 27 shares of the industrial products company's stock valued at $29,000 after purchasing an additional 22 shares during the last quarter. PFS Partners LLC increased its position in shares of Caterpillar by 1,750.0% in the third quarter. PFS Partners LLC now owns 37 shares of the industrial products company's stock worth $30,000 after acquiring an additional 35 shares in the last quarter. Matrix Trust Co boosted its stake in Caterpillar by 93.8% in the 2nd quarter. Matrix Trust Co now owns 31 shares of the industrial products company's stock worth $33,000 after purchasing an additional 15 shares during the period. Cedar Mountain Advisors LLC lifted its holdings in shares of Caterpillar by 82.1% in the first quarter. Cedar Mountain Advisors LLC now owns 51 shares of the industrial products company's stock valued at $36,000 after purchasing an additional 23 shares in the last quarter. Finally, Axiom Investment Management LLC acquired a new stake in shares of Caterpillar in the second quarter worth $36,000. 70.98% of the stock is currently owned by hedge funds and other institutional investors.

Caterpillar Stock Down 3.8%

The company has a quick ratio of 0.85, a current ratio of 1.37 and a debt-to-equity ratio of 1.65. The stock has a market capitalization of $286.25 billion, a price-to-earnings ratio of 26.80, a price-to-earnings-growth ratio of 1.22 and a beta of 1.58. The firm has a 50-day moving average of $787.07 and a two-hundred day moving average of $807.56.

Caterpillar (NYSE:CAT - Get Free Report) last issued its earnings results on Thursday, October 29th. The industrial products company reported $7.20 EPS for the quarter, beating analysts' consensus estimates of $7.06 by $0.14. Caterpillar had a return on equity of 55.53% and a net margin of 14.51%. The firm had revenue of $20.68 billion for the quarter, compared to the consensus estimate of $20.76 billion. During the same quarter in the previous year, the company posted $4.95 earnings per share. The business's quarterly revenue was up 17.3% compared to the same quarter last year. As a group, sell-side analysts anticipate that Caterpillar Inc. will post 27.74 earnings per share for the current year.

Caterpillar Announces Dividend

The firm also recently disclosed a quarterly dividend, which will be paid on Thursday, November 19th. Investors of record on Monday, October 26th will be issued a $1.63 dividend. The ex-dividend date is Monday, October 26th. This represents a $6.52 dividend on an annualized basis and a yield of 1.0%. Caterpillar's dividend payout ratio is currently 28.06%.

About Caterpillar

Caterpillar Inc is a manufacturer of construction, mining, and industrial equipment. Its product portfolio includes excavators, bulldozers, wheel loaders, motor graders, articulated trucks, and other machinery used in construction, infrastructure development, mining, quarrying, forestry, and related industries. The company also produces diesel and natural gas engines, industrial gas turbines, generator sets, and other power-generation and transportation equipment.

Caterpillar operates through businesses focused on construction industries, resource industries, and energy and transportation.

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