Caterpillar's stock runs up to record after UBS raises rating, price target
By Tomi Kilgore, MarketWatch
Shares head for sixth record close in September
Shares of Caterpillar Inc. rallied toward a record high Monday, which would be the sixth record this month, after UBS turned bullish on the mining and farm equipment maker, on the belief that the earnings upcycle will continue and given a growing cash position.
Analyst Steven Fisher raised his rating to buy, after being at neutral since at least June 2014. He raised his stock price target to $140, which is 13% above current levels, from $116.
The stock (CAT) ran up $2.39, or 2.0% in midday trade, enough to pace the gainers in the Dow Jones Industrial Average on Monday. The price gain added about 16.50 points to the Dow's price, which was up 77 points.
On Aug. 30, the stock closed at its first record since Feb. 23, 2012. Since then, it closed at records six times, including three times last week. So far this month, Caterpillar's stock price gain has added 43 points to the Dow, while the Dow has gained 397 points.
Fisher said UBS's latest analysis of private nonresidential construction suggests activity will accelerate in the fourth quarter, with growth reaching the mid-single digit percentage range into 2018. He said 60% of the mining companies surveyed expect mining new equipment budgets will increase in 2018, while over half plan to rebuild fleets within the next 12 months.
"We think there is upside to 2018 consensus driven by ongoing mining investment and a construction re-acceleration, plus margin benefits from [Caterpillar's] restructuring," Fisher wrote in a note to clients.