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Caterpillar Inc. (NYSE:CAT) shares are climbing on Wednesday, after the company reported strong second-quarter results.
The results came amid an exciting earnings season. Here are some key analyst takeaways.
Analyst Michael Feniger reiterated a Buy rating while reducing the price target from $385 to $376.
Caterpillar reported better-than-expected second-quarter results, "demonstrating a higher/resilient EPS profile in a gloomy macro," Feniger said in a note.
Adjusted earnings came in at $5.99 per share, beating consensus estimates of $5.53 per share, he added.
"While CAT is still a cyclical OEM, we are observing some quality attributes relative to other OEMs and prior slowdowns," the analyst wrote. He further stated that Caterpillar was “holding the line” on earnings, despite a macro slowdown.
Analyst Jamie Cook maintained a Buy rating while raising the price target from $390 to $399.
Caterpillar exceeded consensus earnings by 8% "on better profits and margins," Cook said. The company raised the full-year adjusted operating profit and earnings guidance "on a lower sales growth guide relative to management’s previous expectations," he added.
"This quarter demonstrated that CAT's Construction margins are proving more resilient," the analyst wrote. Although Construction sales declined nearly 7%, the segment's margins expanded more than 90 basis points (bps) to 26.1%, "helped by positive pricing, growing services revenues, and lower manufacturing costs," he further stated.
Check out other analyst stock ratings.
Analyst Jerry Revich reaffirmed a Buy rating and price target of $408.
The company's results showed "strong Energy & Transportation pricing," with stabilizing costs, Revich said. Caterpillar has plans to "respond to competitive pricing actions in Construction Industries (in-line with cost reductions, consistent with our channel checks)," he added.
The company achieved $200 million of inventory destock and plans to further destock in the second half of the year, the analyst stated.
It recorded "declining unit costs amid stabilizing supply chain performance," he further wrote.
Analyst Sabahat Khan said the company's second-quarter sales declined by around 4% year-on-year, "reflected lower sales volumes, partially offset by favorable price realization," Khan said. North American retail Machine sales declined by 3%, "which we view as largely neutral," he added.
Management guided to a slight decline in 2024 revenues, versus their previous flat projections, the analyst stated. "As it relates to pricing, CAT noted that it expects a continued normalization going forward, particularly in the Construction Industries market as availability of equipment continues to improve across the industry," he further wrote.
CAT Price Action: Shares of Caterpillar had risen by 0.61% to $328.39 at the time of publication on Wednesday.
Photo: Courtesy Catepillar
Posted In: CAT
