Caterpillar's Third-Quarter Earnings Setup Called Constructive Despite Concerns

Analyst Jamie Cook of Truist Securities has described the setup for Caterpillar Inc.'s (CAT) third-quarter earnings as 'constructive,' despite noting some concerns. Cook highlighted potential challenges, including the sustainability of spending in power, data-center, and AI-related sectors, along with infrastructure bottlenecks and rising input costs. However, Truist maintains a 'Buy' rating and has lowered its price target to $1,100 from $1,225, citing expectations for higher 2026 estimates.

Citi analysts, meanwhile, have dismissed concerns about data-center buildout as overblown, reiterating a 'Buy' rating and a $1,100 price target. The firm's analysts opened an 'Upside 90-Day Catalyst Watch' on Caterpillar in mid-September, pointing to stronger used equipment prices as a positive indicator. CAT shares were trading over 1% higher at the time of writing on Monday.

Caterpillar recently announced strategic moves to expand its operations. On September 29, the company agreed to acquire John Fabick Tractor Company, a dealer serving parts of Missouri, Illinois, Wisconsin, and Michigan’s Upper Peninsula. Additionally, Caterpillar plans to invest approximately $1 billion in North Carolina to boost manufacturing capacity for its Cat Compact business, aiming to meet growing customer demand.

Heading into the third quarter, Caterpillar reported strong second-quarter results, with sales and revenues of $20.5 billion, up 24% year over year. Adjusted profit per share rose to $8.17 from $4.72 a year earlier. The company expects continued sales growth across all primary segments, driven by higher sales volume and favorable price realization. Analysts are estimating third-quarter revenue of approximately $20.40 billion and adjusted EPS of about $6.92, with results expected to be reported on November 4.