Key Takeaways
- Caterpillar is 38% below its June 30 high after its third-quarter report, and Oppenheimer reiterated its Outperform rating and $1,009 target, 54% above the price.
- Analysts keep raising their estimates, with 2026 consensus EPS at $27.33, up from $24.72 90 days ago.
- Oppenheimer’s target implies about 35x forward earnings, against Caterpillar’s five-year average of 19x.
- The target looks too optimistic unless Caterpillar’s 2027 outlook in late January shows margins moving off the bottom of management’s range.
Caterpillar (CAT) rode data center power demand to a record high on June 30. It’s now 38% below that high, and it fell hard again today after its third-quarter report.
Oppenheimer’s Kristen Owen isn’t flinching. Today she reiterated her Outperform rating and $1,009 price target, 54% above the price.
The fourth quarter let investors down
Treasury yields hit 24-year highs in early October. Then on Oct. 26, Wells Fargo’s Jerry Revich pointed to mounting stress around AI funding when he cut his target to $840 from $1,155.
The third quarter looked strong. Sales rose 17% to a record $20.7 billion, and adjusted EPS jumped to $7.20 from $4.95. But the outlook was weaker:
- Management expects only moderate sales growth in the fourth quarter, against a strong quarter a year earlier.
- Dealers are set to cut construction inventory sharply, so Construction Industries’ sales volume should be down modestly.
- Resource Industries’ sales to end users grew less than management expected, as mining shipments slipped.
Oppenheimer is sticking with $1,009
Owen trimmed her target from $1,118 on Oct. 14, and at $1,009 it still sits about 8% above the Street’s average of around $940.
The quarter gave bulls plenty to point to. Power generation sales grew 30% on data center demand, and the backlog hit a record $78 billion. CEO Joe Creed said Caterpillar is already taking some turbine orders into 2030.
TIKR tracks 30 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 $1,009 add up?
The Street’s average target has nearly doubled in a year, from $498 to $939, but it’s down from $979 in mid-August:
The drop since August came from this month’s cuts: Wells Fargo went to $840, UBS to $750, and Bernstein to $749. The 30 analysts covering Caterpillar have targets ranging from $575 to $1,150.
Analysts kept raising their numbers even as the stock slid. Consensus EPS for 2026 now sits near $27, up from about $25 three months ago, and 2027 has moved to around $33 from around $30:
Management kept its full-year outlook and expects strong 2027 sales to end users, so I don’t see the softer fourth quarter pulling 2027’s estimate down.
The multiple is the problem. Caterpillar traded at 25x forward earnings at Wednesday’s close, and lower still today, against a five-year average of 19x:
Put Oppenheimer’s $1,009 target over the roughly $29 a share analysts expect for the next 12 months, and it works out to about 35x forward earnings. Caterpillar has only traded that high during this year’s run-up in the past five years, peaking at 42x on June 30.
The multiple has to come back
Margins are the risk. Even leaving out tariff refunds, management still expects its full-year adjusted operating margin to land near the bottom of its target range.
My take: Caterpillar’s earnings are heading the right way, but $1,009 needs investors to pay close to June’s peak multiple again, which looks too optimistic while construction shipments slow.
The 2027 outlook, due with fourth-quarter results in late January, could change the picture. If management guides to a margin above the bottom of the range, we’d expect analysts to have a reason to raise their estimates again.
So what is Caterpillar stock actually worth?
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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!
