- Jefferies analyst Stephen Volkmann upgraded Caterpillar Inc CAT to Buy from Hold and raised the price target to $260 (an upside of 26%) from $215.
- Volkmann's prior Hold rating had been based on concerns that constrained CAPEX and ESG themes in mining and oil and gas markets that accounted for about 40% of Caterpillar revenue, leading to much more modest cyclical growth than in past cycles.
- Volkmann now believes the Russia/Ukraine crisis has "fundamentally altered global commodity markets" and will likely drive a decade of reinvestment.
- After years of underinvestment, capacity additions and supply diversification will be necessary for the mining and oil and gas sectors, driving structurally higher pricing, stated the analyst.
- Price Action: CAT shares are trading higher by 4.87% at $206.28 on the last check Tuesday.
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