Caterpillar stock price target raised to $502 from $447 at Bernstein

Investing.com - Bernstein SocGen Group has raised its price target on Caterpillar (NYSE:CAT) to $502.00 from $447.00 while maintaining a Market Perform rating on the heavy equipment manufacturer. The stock, currently trading near its 52-week high of $511.50, has delivered impressive returns of over 70% in the past six months, though InvestingPro analysis suggests the stock may be trading above its Fair Value.

The firm cited several factors supporting the price target increase, including the company’s August announcement of higher tariff costs which de-risked the third quarter by addressing an approximately $1 earnings per share headwind. Bernstein also expects order growth to continue at approximately 14% year-over-year.

Dealer inventory destocking is anticipated to continue with a seasonal decline of $50 million in the third quarter and an additional $600 million in the fourth quarter. Equipment pricing is forecast to improve, with Bernstein projecting flat ME&T pricing compared to -3% in the second quarter, primarily driven by the Construction segment.

Power Generation capacity additions are expected to boost second-half earnings per share, with Bernstein estimating a 20-cent tailwind in both the third and fourth quarters. The firm predicts Caterpillar will exceed third-quarter expectations by approximately 2%.

Bernstein’s earnings per share estimate of $21.85 stands about 2% above consensus, with the firm expecting Caterpillar to issue guidance that will raise street estimates by roughly 1%, setting up what they describe as a strong exit rate into 2026.

In other recent news, Caterpillar Inc. announced an agreement to acquire Australian mining software provider RPMGlobal Holdings Limited. This acquisition is set to enhance Caterpillar’s technological capabilities in asset management, fleet management, and autonomy within the mining sector. Additionally, Caterpillar’s Board of Directors has decided to maintain its quarterly dividend of $1.51 per share, continuing its long-standing tradition of consistent dividend payments. The company has been recognized as a member of the S&P 500 Dividend Aristocrats Index due to its 32 consecutive years of increasing annual dividends.

In another development, Erste Group upgraded Caterpillar’s stock rating from Hold to Buy, highlighting the company’s strong operating margins and high return on equity. The research firm anticipates an increase in Caterpillar’s sales starting from the third quarter of 2025, with operating profit growth expected in the first quarter of 2026. Meanwhile, Dutch pension fund ABP has divested its entire stake in Caterpillar, citing ethical concerns. The fund previously held approximately €387 million ($420 million) in Caterpillar shares before the divestment.

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