The dirt kept sliding out from under Caterpillar (CAT) during 2013. Will it hit bottom in 2014?
ASSOCIATED PRESS UBS analyst Steven Fisher and team think it can. He writes:
2013 was a disappointing year for [Caterpillar] across its businesses (ex-LATAM construction). The mining business, in particular, drove several guidance reductions. We expect [Caterpillar] EPS to find a bottom and potentially turn positive over the next 12-24 months as global growth improves, led by North America. We also expect cost reductions and buybacks to be tailwinds…
Still, Fisher urges investors to be cautious with Caterpillar right now. He writes:
Our mind set is that it may be beneficial to be early in order to get ahead of the improvement in earnings, after the stock was a laggard in 2013. However, we think there is some risk that [Caterpillar] guides below the Street with the Q4 report, and some of the [Caterpillar] indicators we assess suggest caution near term. Specifically, UBS expects oil prices to be weaker in 1H14, we expect [Caterpillar] revenues and earnings to decline YOY in Q4 and Q1, and UBS expects the Yen to weaken vs. the US Dollar; all drivers of [Caterpillar] stock performance. Also, we don’t see major near term catalysts in mining and power.
Given Fisher’s mixed message, it shouldn’t come s a surprise that Caterpillar is little changed today at $90.52, even as Terex (TEX) has fallen 0.8% to $41.03 and Joy Global (JOY) has dropped 1.1% to $55.19. Deere has (DE) gained 0.4% to $90.10.
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