Caterpillar shares hit a fresh all-time high on Monday as JP Morgan upgrades the stock to “Overweight”, raises price target

JP Morgan reportedly upgraded Caterpillar from “Neutral” to “Overweight” and revised up its price target for the stock to $200 from $144 previously, citing a positive impact from the largest overhaul of the United States’ tax system in three decades.

Caterpillar shares closed higher for a fourth consecutive trading session on Monday. It has also been the sharpest daily surge since December 13th. The stock went up 2.51% ($4.07) to $166.03, after touching an intraday high at $166.40 and also a fresh all-time high.

In the week ended on January 7th the shares of the heavy machinery manufacturer added 2.78% to their market value compared to a week ago, which marked a seventh consecutive period of gains.

The stock has extended its advance to 5.36% so far during the current month, following an 11.64% surge in December. The latter has been a ninth consecutive monthly gain and also the largest one since November 2016.

For the entire past year, Caterpillar shares gained 69.92% following another 36.46% surge in 2016.

According to JP Morgan, the recently-passed US tax bill may improve Caterpillars free cash flow, while also extending the profit cycle of the companys construction business in North America.

“Although we missed out on Caterpillars out-performance in 2017, we believe that there is still significant upside to the stock,” JP Morgan analyst Ann Duignan wrote in a client note, cited by CNBC. “The Tax Cuts and Jobs Act supports replacement of equipment at an accelerated pace through 2022 as both new and used equipment are now eligible for expensing, a positive for Caterpillars North American end markets.”

The heavy machinery maker is expected to report its fourth-quarter and full-year earnings on January 25th.

According to CNN Money, the 23 analysts, offering 12-month forecasts regarding Caterpillar Inc’s stock price, have a median target of $150.00, with a high estimate of $196.00 and a low estimate of $100.00. The median estimate is a 9.65% decrease compared to the closing price of $166.03 on January 8th.

The same media also reported that 12 out of 25 surveyed investment analysts had rated Caterpillar’s stock as “Hold”, while 11 – as “Buy”. On the other hand, 1 analyst had recommended selling the stock.

Daily and Weekly Pivot Levels

With the help of the Camarilla calculation method, today’s levels of importance for the Caterpillar stock are presented as follows:

R1 – $166.38
R2 – $166.72
R3 (Range Resistance – Sell) – $167.07
R4 (Long Breakout) – $168.11
R5 (Breakout Target 1) – $169.33
R6 (Breakout Target 2) – $169.90

S1 – $165.68
S2 – $165.34
S3 (Range Support – Buy) – $164.99
S4 (Short Breakout) – $163.95
S5 (Breakout Target 1) – $162.73
S6 (Breakout Target 2) – $162.16

By using the traditional method of calculation, the weekly levels of importance for Caterpillar Inc (CAT) are presented as follows:

Central Pivot Point – $159.80
R1 – $164.21
R2 – $166.45
R3 – $170.86
R4 – $175.26

S1 – $157.56
S2 – $153.15
S3 – $150.91
S4 – $148.66