Caterpillar shares fall for a second straight session on Monday, stock rating revised down to “Underperform” at Bank of America

Bank of America revised down its rating on Caterpillar Inc (CAT) to “Underperform” from “Neutral”, as it pointed out that CAT’s weaker energy business was “a problem that is not going away.” The bank has assigned a 12-month price target of $115 on the stock.

Caterpillar shares closed lower for a second consecutive trading session in New York on Monday. It has also been the steepest single-session loss since March 9th. The stock went down 8.71% ($10.89) to $114.14, after touching an intraday low at $113.66, or a price level not seen since April 3rd ($112.15).

Shares of Caterpillar Inc have retreated 22.71% so far in 2020 compared with a 14.52% loss for the benchmark index, S&P 500 (SPX).

In 2019, Caterpillar’s stock went up 16.22%, thus, it again underperformed the S&P 500, which registered a 28.88% gain.

“Energy and mining stocks are signaling another severe capital spending downturn in two of CAT’s most important end markets,” Bank of America analyst Ross Gilardi wrote in an investor note.

Dealer sales “are likely to get worse before they get better as construction equipment dealers just started getting more negative,” the analyst also noted.

Analyst stock price forecast and recommendation

According to CNN Money, the 21 analysts, offering 12-month forecasts regarding Caterpillar Inc’s stock price, have a median target of $132.00, with a high estimate of $201.00 and a low estimate of $80.00. The median estimate represents a 15.65% upside compared to the closing price of $114.14 on April 13th.

The same media also reported that at least 10 out of 24 surveyed investment analysts had rated Caterpillar Inc’s stock as “Buy”, while 8 – as “Hold”. On the other hand, 1 analyst had recommended selling the stock.