Morgan Stanley Sees Quick Return to Record Levels For Caterpillar Stock

Analyst upgrades could push CAT stock even higher

Managing Editor
Mar 2, 2018 at 9:54 AM
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Caterpillar Inc. (NYSE:CAT) stock is lower today with the broader market, despite bullish attention from Morgan Stanley. Specifically, analysts there initiated coverage on the Dow component with an "overweight" rating and price target of $185, a 20% increase from the shares' current perch of $147.79.

Caterpillar stock carved out an impressive channel of higher highs in 2017 that culminated in a record high of $173.18 on Jan. 16. And although the shares slipped in February with the broad market sell-off, the pullback appears to have been contained by their 100-day moving average. Overall, the blue chip remains up 52% over the past year.

Despite the long-term uptrend, analysts remain skeptical. Of the 19 brokerages covering CAT, 10 rate it a tepid "hold." This indicates there is plenty of room for upgrades that could push the stock higher.

Options traders lately have taken a call-skewed approach. This is based on the security's 10-day call/put volume ratio of 1.68 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which tops 91% of ratings over the past year.

Furthermore, Caterpillar has rewarded premium buyers over the past year. The stock's Schaeffer's Volatility Scorecard (SVS) stands at a lofty 91 out of 100, indicating the shares have handily exceeded options traders' volatility expectations in the past 12 months.


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