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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