Zacks Investment Research downgraded shares of Caterpillar Inc. (CAT) from NEUTRAL to UNDERPERFORM on February 22, 2013, with a target price of $83.00.
Caterpillar reported fourth quarter adjusted EPS of $1.91, down 18% year over year, primarily due to reduced sales, lower production and a decline in inventory. However, earnings per share of $9.35 in fiscal 2012 were an all-time record and also increased 6% from the prior year. For fiscal 2013, sales are expected between $60 billion and $68 billion with earnings between $7.00 and $9.00. Caterpillar remains affected by slowing demand and inventory correction as a result of overproduction compared to demand. The company expects sales in the first quarter of fiscal 2013 to decline more than $2 billion annually as dealers are expected to continue to resize inventory levels to match demand. Furthermore, the recent loss of sales momentum, declining backlog, negative impact of the European debt crisis and a slowing Chinese economy remain concerns. We have downgraded our recommendation from Neutral to Underperform with a target price of $83.00.
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