2013-12-28

Caterpillar (NYSE:CAT) was downgraded by analysts at UBS AG from a “hold” rating to a “sell” rating in a research report issued to clients and investors on Friday, StockRatingsNetwork reports. They currently have a $6.00 price target on the stock. UBS AG’s price target suggests a potential downside of 93.40% from the company’s current price.

The analysts wrote, “These are confusing times for the stock market, Jim Cramer told his “Mad Money” audience. There’s always somebody telling you to do exactly the opposite of what you should really be doing. But Cramer said it’s not about sounding smart, it’s about getting it right what to buy, what to sell, what direction the market’s headed. “You get those things right, and it’s a heck of a lot easier to make money in this or any market,” Cramer said. By doing your homework, “you just might learn something that will make you a better investor,” he said, and a better investor is one who makes more money, “because that’s the goal here.” Cramer said he and Stephanie Link, the research director of Cramer’s charitable portfolio, Action Alerts PLUS, recently went back over every trade AAP made over the last five years. Here’s what Cramer has learned. Caterpillar (CAT) had been going down for weeks on end as analysts raced to cut their estimates ahead of what looked to be a particularly bad quarter, Cramer said. The analysts had turned bearish after CAT’s business globally took huge hits because customers were struggling to get credit for new machines. This was at the depth of the Great Recession. When Caterpillar finally reported, the quarter turned out to be even uglier than the analysts had predicted. But CAT’s stock barely reacted to the bad news. “That’s a classic sign that you’re looking at a bottom,” Cramer said. “The worst is over!” CAT roared and then rose. It may seem counter-intuitive to buy a stock right after the estimates have been slashed, but when you think about it, it actually makes a lot of sense. JPMorgan Chase (JPM) is another example of this, Cramer said. It seemed done for after its “London Whale” trading fiasco of 2012. However, just like Caterpillar in March of 2009, JPMorgan’s stock didn’t get hit after analysts cut estimates. Instead, it flat-lined and then actually inched up slightly. Once we learned JPMorgan’s losses were contained at $6 billion, that was the moment we had to buy, Cramer said. If you did, you rode a huge rally.Coming Back for Secondaries Everybody makes a mistake sometimes, Cramer said. But if you want to become a great investor you don’t just need to learn from your mistakes, you need to learn how to recognize what your mistakes actually are and notice what works. “We’re full of all sorts of unconscious biases, and that can make it incredibly difficult to learn from experience,” Cramer said. Think empirically, he said.

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Several other analysts have also recently commented on the stock. Analysts at Thomson Reuters/Verus upgraded shares of Caterpillar from a “sell” rating to a “hold” rating in a research note to investors on Tuesday. Separately, analysts at TheStreet reiterated a “buy” rating on shares of Caterpillar in a research note to investors on Tuesday. Two research analysts have rated the stock with a sell rating, fourteen have given a hold rating and nine have issued a buy rating to the stock. The company currently has a consensus rating of “Hold” and a consensus price target of $86.74.

Caterpillar (NYSE:CAT) traded down 0.31% during mid-day trading on Friday, hitting $90.87. The stock had a trading volume of 3,374,040 shares. Caterpillar has a 52 week low of $79.49 and a 52 week high of $99.70. The stock’s 50-day moving average is $85.39 and its 200-day moving average is $84.67. The company has a market cap of $57.826 billion and a P/E ratio of 17.38.

Caterpillar (NYSE:CAT) last announced its earnings results on Wednesday, October 23rd. The company reported $1.45 EPS for the quarter, missing the Thomson Reuters consensus estimate of $1.71 by $0.26. The company had revenue of $13.42 billion for the quarter, compared to the consensus estimate of $14.49 billion. During the same quarter in the prior year, the company posted $2.54 earnings per share. The company’s quarterly revenue was down 18.4% on a year-over-year basis. On average, analysts predict that Caterpillar will post $5.50 earnings per share for the current fiscal year.

The company also recently declared a quarterly dividend, which is scheduled for Thursday, February 20th. Investors of record on Tuesday, January 21st will be given a dividend of 0.60 per share. This represents a $2.40 dividend on an annualized basis and a yield of 2.64%. The ex-dividend date of this dividend is Thursday, January 16th.

Caterpillar Inc (NYSE:CAT) is a manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives.

This article (Caterpillar Stock Rating Lowered by UBS AG (CAT)) was originally developed by and is property of American Banking News.

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