Caterpillar Shares Fall After Stock Gets Double Downgrade from UBS

Shares of Caterpillar were tumbling on Tuesday after the company received a double downgrade from UBS analysts.

The firm downgraded the industrial giant from “buy” to “sell” and cut its 12-month price target on shares from $154 to $125.

According to UBS, concerns over the slowdown in global construction demand prompted the downgrade.

“We believe ~55% of CAT’s end markets will peak in 2019, pressuring revenue and margins in 2020 as demand declines,” analyst Steven Fisher wrote. “We expect Construction Industries revenue to grow ~4% in 2019 and then decline ~8% YoY in 2020, driven by lower demand in North America, Europe and China, partially offset by a continued recovery in Latin America.”

Not too long ago Caterpillar reported dismal quarterly results for the fourth quarter. Bespoke Investment had said the quarter was the worst for the company in a decade.

“We will continue to monitor the situation [in China] but as of now, we are forecasting the overall China market to be roughly flat in 2019 following two years of significant growth. China represents about 10% to 15% of our total Construction Industries sales and about 5% to 10% of total Caterpillar sales and revenue,” Caterpillar CEO Jim Umpleby said on the earnings call in January.

Disclaimer: We have no position in Caterpillar Inc. (NYSE: CAT) and have not been compensated for this article.