UBS upgrades Caterpillar as trade risks ease, but macro uncertainty remains

Sam Boughedda

Fri, May 16, 2025, 6:16 AM 1 min read

Investing.com -- UBS upgraded Caterpillar (NYSE:CAT) to Neutral from Sell successful a enactment Friday, raising its terms people for the banal to $357 from $272 a share.

The slope highlighted a much contained downside script for the banal aft caller advancement successful U.S.-China commercialized talks, though analysts warned the institution is “not retired of the macro woods.”

“We nary longer spot the aforesaid grade of downside hazard to net and multiples,” UBS said, noting that earlier projections of a 20-40% year-over-year net diminution successful 2025 person been revised to 15-20%.

The displacement follows what UBS called “better than expected advancement and outcomes of commercialized discussions with China,” arsenic good arsenic caller argumentation moves pointing toward tariff de-escalation.

UBS had antecedently chopped its machinery sum estimates by implicit 30% pursuing April 2 tariff announcements.

While the easing of commercialized tensions has improved the outlook, UBS cautioned that “lingering uncertainty volition beryllium somewhat of a resistance connected demand.”

Tariffs, adjacent if softened, volition inactive beryllium “borne by a operation of corporates and consumers.”

UBS present expects U.S. non-residential operation to rebound to 4% maturation successful 2025, with Caterpillar’s North American operation machinery income projected to instrumentality to 3-4% maturation successful the 2nd fractional of 2026.

Earnings margins are besides expected to diminution little severely, 240 ground points alternatively of the antecedently forecast 390.

Despite the improved outlook, UBS warned of a “slow rollover” successful the broader system and flagged the hazard that Caterpillar’s banal “could commercialized little connected the weaker data.”

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