Caterpillar Has Potential For Multiple Expansion Post Earnings, Goldman Sachs Says

Goldman Sachs analyst Jerry Revich, maintaining a Buy rating and $442 price forecast, expressed views on Caterpillar, Inc.'s CAT mixed fourth quarter FY24 results reported today.

Total sales and revenue for the quarter declined 5% year-over-year to $16.215 billion, missing the consensus of $16.411 billion, while adjusted earnings of $5.14 per share came above the consensus of $4.99.

For 2025, sales are expected to decline ~1% due to unfavorable pricing, with a slight headwind in other income from lower interest income and currency effects.

The analyst writes that the key discussion around the company is whether the 2025 margin outlook represents a cyclical trough following its fourth-quarter results.

The results highlighted positives such as a sharp increase in destocking ($700 million) and a book-to-bill ratio of 1.08x in orders, adds the analyst.

However, concerns remain over 2025 margin targets, which are approximately 200 basis points below FactSet consensus, and a fourth-quarter EBIT miss—though the latter is seen as less significant given destocking progress, writes the analyst.

Revich says that while he expects to decline due to the reset in 2025 estimates, the peak of destocking headwinds, strong bookings, and effective cost management amid production cuts could support multiple expansion post-earnings.

The analyst estimates EPS of $21.68 for FY25 and $23.33 for FY26.

Price Action: CAT shares are down 4.51% at $375.51 at the last check Thursday.

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