UBS announced on Friday that it has upgraded Caterpillar shares from "sell" to "neutral," believing that the trade de-escalation limited the stock's downside potential.
The broker, which is also raising its target price from $272 to $357, explains that it no longer sees the same level of risk in the group's results following the better-than-expected progress in negotiations between the United States and China.
The broker, which notes that uncertainty surrounding the issue is likely to continue to weigh on demand, says that the stock's P/E of 17.5x is in line with the construction equipment manufacturer's historical P/E ratio during mid-cycle periods.
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Caterpillar Inc. is the world's leading producer of mining construction and operation equipment, diesel and natural gas motors, and industrial gas turbines. Net sales break down by activity as follows:
- sale of machines and motors (94.7%): terracing and construction machines (power shovels, high-lifts, bulldozers, etc.), agricultural and forestry tractors, motors and turbines (for heavy trucks, boats, industrial machines, and power stations), conveyer systems, hydraulic circuits and components, etc.;
- financial services (5.3%).
Net sales are distributed geographically as follows: North America (54.2%), Europe/Africa/Middle East (18.9%), Asia/Pacific (16.6%) and Latin America (10.3%).
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Investor
Investor
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Global
Global
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ESG MSCI
ESG MSCI
The MSCI ESG score assesses a company’s environmental, social, and governance practices relative to its industry peers. Companies are rated from CCC (laggard) to AAA (leader). This rating helps investors incorporate sustainability risks and opportunities into their investment decisions.
