(News Bulletin 247) – UBS downgraded its recommendation on Caterpillar stock on Friday, bringing it from ‘neutral’ to ‘sell’ with a price target lowered from 230 to 225 dollars.
From the broker’s point of view, the American manufacturer of construction machinery does not benefit from a sufficiently favorable cycle to justify its current level of valuation.
UBS points out that the growth of the group’s growth portfolio has been steadily decelerating due to the slowdown in markets such as construction or the oil and gas industry.
As a result, the broker does not expect significant growth in its results in the coming years: after a 27% increase in EPS last year, it only forecasts growth of 16% for 2023, then 4% in 2024, before broadly stable growth in 2025.
Conversely, the current valuation multiples suggest that investors are counting on material growth by 2024, but also beyond this deadline, warns UBS in its note.
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