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Investing.com - Bernstein SocGen Group maintained its Market Perform rating and $447.00 price target on Caterpillar (NYSE:CAT), a prominent player in the Machinery industry currently trading at $419.04, despite the company’s increased tariff cost expectations. According to InvestingPro data, the stock has shown strong momentum with a 22.87% return over the past six months.
Caterpillar revised its tariff cost projections upward to $500-$600 million for the third quarter and $1.5-$1.8 billion for 2025, higher than previous estimates of $400-$500 million and $1.3-$1.5 billion, respectively.
The construction equipment manufacturer now anticipates its full-year adjusted operating profit margin to approach the lower end of its target range due to these additional costs, which represent an incremental EBIT headwind of $100 million in the near term and $250 million in 2025.
According to Bernstein, the primary factors driving the increased tariff costs are Section 232 tariffs on steel and aluminum, where the Department of Commerce is imposing 50% tariffs, along with new India tariffs. The majority of the incremental impact stems from Section 232 tariffs and affects Caterpillar’s Construction Industries segment.
Despite these tariff challenges, Caterpillar has maintained its sales and revenue expectations, with no changes to those forecasts.
In other recent news, Caterpillar has made several headlines with updates affecting its financial outlook and market perception. The company raised its 2025 tariff impact estimate, now expecting a net impact of approximately $500 million to $600 million for the third quarter and about $1.5 to $1.8 billion for the full year. This revision follows new tariff guidelines and additional clarifications since its last earnings release. In response to these developments, Oppenheimer lowered its price target for Caterpillar to $480, citing the increased tariff impact, while maintaining an Outperform rating. Similarly, JPMorgan adjusted its price target to $505, also maintaining an Overweight rating, due to concerns over tariffs affecting steel and aluminum content in imports.
Meanwhile, Evercore ISI upgraded Caterpillar’s stock rating from In Line to Outperform, highlighting the company’s resilience in construction equipment margins despite price-cost challenges. This upgrade reflects Caterpillar’s volume leverage and geographic mix advantages. Additionally, Norway’s sovereign-wealth fund decided to divest from Caterpillar, citing concerns about potential contributions to human rights violations in conflict situations. These developments provide investors with a comprehensive view of the factors currently influencing Caterpillar’s market position and future prospects.
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