Barclays Analyst Cautious on Caterpillar Inc. (CAT) Following Disappointing Guidance

In a research report released yesterday, Barclays analyst Robert Wertheimer reiterated an Equal Weight rating on shares of Caterpillar Inc. (NYSE:CAT) with a $65 price target, after the construction equipment giant trimmed its first-quarter estimates for revenue and profit. The company now expects first quarter profit in a range of $0.60 to $0.65c per share, versus prior consensus of $0.95.

Wertheimer commented, “Though we were already below consensus and acknowledged downside risk, we would not have gotten all the way down to the 67 cent guidance midpoint absent this outlook. Still, there is nothing dramatic about the estimate. Our updated forecast total op margin is up slightly q/q on down sales. 4Q often is an expense-heavy quarter, so the margin lift into 1Q is lower than normal.”

The analyst continued, “Our full-year 2016 EPS estimate remains below CAT’s guide ($3.35 vs. ~$4.00 CAT). We adjust our model accordingly for Q1, with both sales and earnings at the low end of CAT’s range (~$9.3B and 65c). CAT earnings are far below normal in mining, heading to the same in oil and gas, and are well below normal in construction outside of the US and Europe, in our view. Despite the rally in oil prices, however, it seems likely to us that the gap versus normal will widen a bit more before recovering.”

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Robert Wertheimer has a total average return of 15.7% and a 42.9% success rate. Wertheimer has a 90.7% average return when recommending CAT, and is ranked #1026 out of 3809 analysts.

Out of the 6 analysts polled by TipRanks (in the past 3 months), 4 rate Caterpillar stock a Hold, while 2 rate recommend to Sell. With a downside potential of 18%, the stock’s consensus target price stands at $61.50.

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