Key Takeaways
- Evercore ISI cut its Caterpillar price target to $833 from $1,045 on Nov. 10 but kept its Outperform rating, a target 40% above the stock’s price.
- Caterpillar has fallen 34% in six months, most recently on a cautious fourth-quarter outlook and fears that a Democratic Congress and state permit pauses will slow data-center spending.
- Earnings estimates have held up. The stock’s drop came from its multiple, which is now right at its five-year average.
- Evercore’s target needs about 28x forward earnings, a premium investors are unlikely to pay again within a year, though the stock looks reasonably priced on its earnings alone.
Caterpillar (CAT) is down 34% in six months and sits 45% below its June high. Evercore ISI still thinks it can climb 40% from here.
Investors sold the record quarter
Caterpillar’s third quarter, reported Oct. 29, was its biggest ever. Sales rose 17% to $20.7 billion, adjusted earnings per share jumped to $7.20 from $4.95, and the backlog hit a record $78 billion. The stock fell anyway, because of the outlook: management guided to moderate sales growth in the fourth quarter as dealers cut about $1.6 billion of inventory.
Then came the election. Caterpillar sank 6% on Nov. 4 after Democrats won both houses of Congress, as AI infrastructure stocks sold off on fears of tighter rules for data centers. And Atlas Energy Solutions, a Caterpillar power equipment customer, said Texas had paused air permits for data center projects.
Evercore stays bullish, at a lower price
Evercore ISI’s David Raso cut his target to $833 from $1,045 on Nov. 10 and kept his Outperform rating. That’s 40% above Caterpillar’s $594 share price. It also puts Evercore right in the pack: TIKR’s consensus target is $823, 38% above the price, and the 26 targets run from $575 to $1,045.
TIKR tracks 29 analysts on Caterpillar. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Caterpillar, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Caterpillar’s Analyst Ratings
Does $833 add up?
The consensus target has come down from its $979 peak in mid-August, but it’s still well above the $576 of a year ago.
Earnings estimates have barely moved. Analysts expect $27.11 a share this year, up from $26.94 three months ago, and $32.25 next year:
They slipped only a few cents after the report, and with a record backlog behind them, I don’t expect deeper cuts.
So the slide has come from the multiple. Caterpillar traded at 19x forward earnings at the Nov. 10 close. That’s right on its five-year average and far below its 42x peak on June 30:
Evercore’s $833 works out to about 28x the next 12 months’ consensus earnings, about where the stock traded at the end of September.
$833 needs investors to love AI again
Data centers drive much of Caterpillar’s growth, and both the new Congress and Texas’s permit pause could slow orders. Then again, the Financial Times reported that Anthropic agreed to pay $3.4 billion to take over 1.7 gigawatts of Caterpillar gas generator orders.
Evercore has the business right. But $833 asks investors to pay a premium for Caterpillar’s power business again, and I doubt they will within a year. At 19x, they aren’t paying anything extra for the AI story, so I’d buy Caterpillar for the earnings and count $833 as the payoff if that story comes back. The fourth-quarter report in late January, with management’s first look at 2027, will show us whether sales to end users hold up while dealers cut inventory.
So what is Caterpillar stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Caterpillar could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
