Caterpillar's (CAT) three segments are expected to shift into growth mode in 2026 as the company absorbs "peak pain" from H2 of 2024 through 2025, BofA Securities said in a note Wednesday.
The firm called Caterpillar's Q2 "passable," with adjusted earnings per share of $4.72 coming in slightly below the $4.88 consensus, weighed by a larger-than-expected tariff headwind and continued pricing pressure.
But BofA noted that many forward-looking key performance indicators are encouraging, with backlog rising $2.5 billion to a record $37.5 billion and dealer machine inventories down $400 million.
Caterpillar said it expects net incremental tariffs of $1.3 billion to $1.5 billion in 2025, including some mitigation measures and cost controls. For Q3, it estimated a $400 million to $500 million tariff hit.
"While the FY25 guide implies no upgrades to consensus this year, we see an exit rate into 2026 that is positive," according to the note.
BofA raised its price objective on Caterpillar to $495 from $460 and maintained its buy rating.
Price: 432.78, Change: -1.45, Percent Change: -0.33
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.