Caterpillar Showing Weakness Despite Evercore Boost

Shares of Caterpillar Inc. CAT were down in the Wednesday’s pre-market hours, despite Evercore having said the company will raise its guidance next month. The downward movement suggests investors are still concerned over the negative impacts of the last week Federal raids at the company’s headquarters.

Big Raid In Small Peoria

Caterpillar is facing tough times after three federal agencies raided the company's corporate headquarters in Peoria, Illinois, last week. Agents from the Internal Revenue Services, Federal Deposit Insurance Corporation and U.S. Department of Commerce carried out a search warrant for three Caterpillar facilities, including corporate headquarters.

The news of raid came after Caterpillar disclosed in February that the IRS proposed a $2 billion tax penalty.

Caterpillar spokesperson told Benzinga last week that “Co. Has Been In Full Cooperation, Says Caterpillar is Company With The Highest Integrity.”

'We Are Back To Work,' Will Continue To Operate Throughout Course Of Ongoing Investigation, ConExpo 2017 Still Planned For Next Week,” the spokesperson added.

Raids Distract Bullish Investment Case

Jim Umpleby, CEO of Caterpillar recently told CNBC "[W]e were surprised by actions of last week, because we have been cooperating with authorities — we are cooperating [...] we are an honorable company [...] we live by a code of conduct."

However, the recent raids are distracting investors from the company’s positive investment scenario as its end markets are now getting due for recovery, notably mining aftermarket, mining replacement and China construction.

Shares of Caterpillar closed Tuesday’s regular trading session at $95.93. In the pre-market hours Wednesday, the stock is down 3.58 percent to $92.50.

Related Link: Einhorn Goes Short On Caterpillar