Caterpillar stock price target raised to $520 by JPMorgan on strong backlog

Published 06/08/2025, 12:18
© Reuters.

Investing.com - JPMorgan has raised its price target on Caterpillar (NYSE:CAT) to $520 from $475 while maintaining an Overweight rating, despite the heavy equipment manufacturer reporting mixed second-quarter results. The stock, currently trading near its 52-week high of $441.15, has delivered impressive returns with a 35% gain over the past year. According to InvestingPro analysis, the stock appears overvalued at current levels, with technical indicators suggesting overbought conditions.

Caterpillar posted adjusted earnings per share of $4.72 in the second quarter of 2025, approximately 3% below consensus estimates, while consolidated sales declined 1% year-over-year to $16.6 billion, exceeding market expectations of $16.3 billion. The company’s EBIT margin fell about 480 basis points year-over-year to 17.6%, below the Street’s forecast of 18.3%. The $204 billion market cap company maintains a P/E ratio of 22x and boasts a solid financial health score of "GOOD" according to InvestingPro metrics.

Management has updated its guidance, now anticipating moderately higher year-over-year sales in 2025, compared to previous expectations of flattish growth. However, EBIT margin is projected to fall within the lower half of the targeted annual range due to $1.3-1.5 billion in tariff headwinds.

JPMorgan views this margin guidance reduction despite improved sales outlook as a "clearing event" for investors to frame the bull case for 2026. The firm cited several positive factors, including Caterpillar’s end-of-quarter backlog of $3.75 billion, up approximately 7% sequentially, with orders growing about 10% year-over-year.

The investment bank also highlighted potential tailwinds for 2026, including volume benefits from 2025 underproduction, possible pricing improvements following Federal Reserve rate cuts, and the company’s ability to offset tariff headwinds over time through pricing adjustments if current tariffs become permanent. InvestingPro subscribers have access to 13 additional key insights about Caterpillar, including its 55-year track record of maintaining dividends and detailed analysis of its cash flow coverage. Get the complete picture with InvestingPro’s comprehensive research report, part of its coverage of 1,400+ top US stocks.

In other recent news, Caterpillar Inc. reported its Q2 2025 earnings, revealing a mixed financial performance. The company posted an earnings per share (EPS) of $4.72, which fell short of the anticipated $4.90. However, Caterpillar’s revenue reached $16.6 billion, surpassing the forecast of $16.27 billion. Despite the revenue beat, the EPS miss has been a focal point for investors. In light of these developments, BofA Securities raised its price target for Caterpillar to $495 from $460, maintaining a Buy rating. BofA’s positive outlook comes even though Caterpillar’s EPS was slightly below consensus estimates of $4.88. These recent developments highlight the mixed sentiment surrounding Caterpillar’s financial performance and future prospects.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.